Item 11. Executive Compensation

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Item 11. Executive Compensation

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis (“CD&A”)

In this section we provide an explanation and analysis of the material elements of the compensation provided to our Chief Executive Officer, Chief Financial Officer, and both of our other two executive officers who were serving on June 30, 2024, which was the end of our fiscal year 2024 (collectively referred to as our “named executive officers” or “NEOs”).

Our named executive officers and their positions at the end of fiscal year 2024 were:

Charles LiangPresident, Chief Executive Officer (“CEO”) and Chairman of the Board
David WeigandSenior Vice President, Chief Financial Officer and Chief Compliance Officer
Don CleggSenior Vice President, Worldwide Sales
George KaoSenior Vice President, Operations

Overview of Compensation

FY2024 Other NEO Compensation Mix

(Aggregate Compensation)(1)

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(1)The chart presents the percentage compensation by compensation component received by the three non-CEO named executive officers together (aggregate compensation) as a group, as well as the split between cash and equity compensation for all such persons received in the aggregate as a group. No equivalent chart is presented for CEO compensation because, for all of fiscal year 2024, and continuing for up to about the next five years, almost all of Mr. Liang’s compensation has been, and is expected to be, based only upon his ability to earn the 2021 CEO Performance Award (which vested in its entirety during fiscal year 2024) and the 2023 CEO Performance Award (which was issued during fiscal year 2024), all as further described below.

SMCI | 2024 Form 10-K | 135

Compensation Philosophy and Objectives—Continuing Improvement of Performance-Based Compensation Arrangements

Our executive compensation philosophy is to link a significant portion of NEO compensation to corporate performance using components such as PRSUs and stock options and reduce our reliance on fixed compensation such as Base Salary, fixed bonus component payable in semi-monthly installments in the form of cash and based upon a percentage of Base Salary (“Fixed Bonus”), and regularly refreshed stock grants with only time-based vesting. During fiscal year 2024, such efforts (which began in the fiscal year ended June 30, 2021, or fiscal year 2021) continued. For our CEO, as described further below, a new performance-based option was awarded in anticipation of the full vesting of his existing performance-based option, and such existing performance-based option did in fact fully vest during the course of fiscal year 2024. With respect to our NEOs besides our CEO (the “Other NEOs”), our efforts also included placing an additional NEO, Mr. George Kao, on a performance-based plan with defined performance metrics (“key performance indicators” or “KPIs”) similar to the plans which had been provided to each of Mr. Weigand and Mr. Clegg since fiscal year 2022. As a result, for fiscal year 2024, all our Other NEOs (Mr. Weigand, Mr. Clegg, and Mr. Kao) each had a performance program (the “FY2024 Performance Program for Other NEOs”) as described further below. Our efforts to link pay to performance also included continuing to re-evaluate and refine the KPIs and their weightings utilized in the FY2024 Performance Program for Other NEOs from those utilized for the prior fiscal year in order to more closely align link compensation and corporate performance for each Other NEO under his program. Each FY2024 Performance Program for Other NEOs was adopted by our Compensation Committee in January 2024. See “FY2024 Performance Program for Other NEOs” below for more specific information about the design and operation of this incentive compensation program for each of Messrs. Weigand, Clegg and Kao for fiscal year 2024.

With respect to our CEO, Mr. Liang, fiscal year 2024 was the third year of evaluating and monitoring the results of performance-based compensation arrangements made with Mr. Liang in fiscal year 2021 (the “2021 CEO Performance Award”). Since the adoption of the FY2021 CEO Performance Award, Mr. Liang’s compensation has been almost completely performance based. In connection with the 2021 CEO Performance Award, Mr. Liang’s Base Salary was reduced to $1 per year and Mr. Liang agreed that he would not be eligible for any increase in Base Salary, or any other cash compensation, until June 30, 2026. As described further below, the 2021 CEO Performance Award permits Mr. Liang to purchase 10,000,000 shares of our common stock at an exercise price of $4.50 per share (which price was 32% higher than the market price of our common stock on the date of the award ($3.41)), and is comprised of five tranches vesting only if the market price of our common stock reached various prices (ranging from $4.50 to $12.00 per share) and we achieved certain specified revenue goals. At the beginning of fiscal year 2024, four of the five tranches under Mr. Liang’s FY2021 CEO Performance Award (amounting to 8,000,000 of the 10,000,000 shares subject to the option) had already vested. Only the final tranche of such award, consisting of the remaining 2,000,000 of the original 10,000,000 shares subject to the option under the 2021 CEO Performance Award, remained unearned. Furthermore, one of the two performance goals necessary for the vesting of such final tranche (specifically, the stock price goal of $12.00 per share) had also already been achieved during fiscal year 2023. The only remaining goal under the 2021 CEO Performance Award to be achieved at the commencement of fiscal year 2024 was the fifth and final revenue goal of $8.0 billion in annualized revenue. During the course of fiscal year 2024, such fifth and final revenue goal of $8.0 billion in annualized revenue was achieved following the end of the second quarter of fiscal year 2024, resulting in the vesting of the remaining 2,000,000 shares subject to the option under the 2021 CEO Performance Award.

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Given the progression of achievement under the 2021 CEO Performance Award, and in order to continue to motivate and incentivize Mr. Liang as our CEO, the Compensation Committee during the second quarter of fiscal year 2024 began consideration of another performance-based compensation arrangement for Mr. Liang. After consideration, the Compensation Committee believed that, given the increase in stockholder value following the issuance of the 2021 CEO Performance Award, it was in the best interests of the Company and its stockholders to grant to Mr. Liang a new long-term performance-based option award (the “2023 CEO Performance Award”) very similar in structure to the 2021 CEO Performance Award, but with different quantitative goals. The 2023 CEO Performance Award permits Mr. Liang to purchase up to 5,000,000 shares of our common stock at an exercise price of $45.00 per share (which price represented a premium of approximately 53% to the closing stock price reported on NASDAQ on the date of grant), and is comprised of five tranches that vest only if the market price of our common stock reaches various prices (ranging from $45.00 to $110.00 per share) and the Company achieves certain specified revenue goals (ranging from $13 billion to $21 billion in annualized revenue). The 2023 CEO Performance Award was granted to Mr. Liang in November 2023. See “Discussion and Analysis of 2023 CEO Performance Award” for additional discussion with respect to the 2023 CEO Performance Award and the achievement of the various goals thereunder. In connection with the 2023 CEO Performance Award, it was agreed that Mr. Liang would continue to receive a de minimis salary of $1 per annum (or such other non-waivable minimum wage requirement) and no cash bonuses through the earlier of (1) the date all of the tranches under the 2023 CEO Performance Award shall have vested and (2) March 31, 2029. Previously, such restriction period ran through just June 30, 2026. Similar to the 2021 CEO Performance Award, Mr. Liang must also remain as the Company’s CEO (or such other position with the Company as Mr. Liang and the Board may agree) at the time each goal is met in order for the corresponding tranche to vest. This helps ensure Mr. Liang’s active leadership of the Company over the long term.

In summary, since the latter part of fiscal year 2021 and for each of fiscal years 2022, 2023 and 2024 almost all of Mr. Liang’s compensation has been based only upon achieving the revenue goals and common stock price targets under his 2021 CEO Performance Award or his 2023 CEO Performance Award. To fully achieve the performance goals of the 2023 CEO Performance Award, our revenue must continue to increase to $21 billion over a rolling four-quarter period (from $7.1 billion for fiscal year 2023, which was the last full fiscal year before the award). Based upon the 60-trading-day average stock price of our common stock since the issuance of the 2023 CEO Performance Award, four of the five stock price goals under the 2023 CEO Performance Award (specifically, goals of $45, $60, $75, and $90 per share were achieved during fiscal year 2024), and only the stock price goal of $110 per share remains to be achieved. As of the end of fiscal year 2024, none of the revenue goals under the 2023 CEO Performance Award had been certified by the Compensation Committee as having been achieved, so none of the tranches under the 2023 CEO Performance Award have been earned. However, based upon revenues for the prior four quarters as of June 30, 2024 of $14.9 billion reflected in the financial statements attached to this Annual Report, the $13.0 billion revenue goals has been achieved. The Company expects the Compensation Committee will certify the achievement of each of this revenue goal, and the vesting of the first tranche under the 2023 CEO Performance Award (representing 1,000,000 of the 5,000,000 shares subject to such option) will occur, shortly after the filing of this Annual Report.

Fiscal Year 2024 Business Performance Highlights

The following are highlights of our performance for fiscal year 2024. When given, comparisons are between fiscal year 2024 and fiscal year 2023 results.

  • Revenue was $14,989.3 million, up 110.4%;

  • Gross margin was 13.8%, down from 18.0%;

  • Net income was $1,152.7 million, an improvement of 80.1%;

  • Diluted net income per common share was $1.92, up 68.4%; and

  • During fiscal year 2024 and the period from July 1, 2023 to June 30, 2024, our stock price reached a high of $118.81 per share on March 13, 2024.

SMCI | 2024 Form 10-K | 137

Process Overview

The Compensation Committee of the Board discharges the Board’s responsibilities relating to compensation of all of our executive officers. At the end of fiscal year 2024, the Compensation Committee was comprised of two non-employee directors, although during the period from July 1, 2023 through March 11, 2024, the Compensation Committee was comprised of three non-employee directors until the resignation of Mr. Shiu-Leung (Fred) Chan as a director on such date. All of the directors who served on the Compensation Committee during fiscal year 2024 were independent pursuant to the applicable listing rules of NASDAQ and non-employee directors for purposes of Rule 16b-3 under the Exchange Act.

The agenda for meetings is determined by the Chair of the Compensation Committee with the assistance of our Chief Financial Officer and Deputy General Counsel. Committee meetings are regularly attended by our Chief Financial Officer and our Deputy General Counsel. However, during the meetings, our Chief Financial Officer does not participate in the consideration of his own performance or compensation, although he may provide an introduction of the topic to be considered to the Compensation Committee. Because he is not a named executive officer, the Compensation Committee does not consider the performance or compensation of our Deputy General Counsel. Our Chief Financial Officer and Deputy General Counsel support the Compensation Committee in its work by providing information relating to our financial plans and certain personnel-related data. In addition, the Compensation Committee has the authority under its charter to hire, terminate and approve fees for advisors, consultants and agents as it deems necessary to assist in the fulfillment of its responsibilities. As part of making an overall assessment of each named executive officer’s role and performance, and structuring our compensation programs for fiscal year 2024, the Compensation Committee (among other things) (1) reviewed recommendations of our Chief Executive Officer, (2) considered publicly available peer group compensation data, and (3) considered compensation data assembled for the Compensation Committee by Aon from a sample of public companies selected by us, with input on the selection of this sample from Aon. For fiscal year 2024, the peer group selected consisted of the following 18 companies (the “FY2024 Peer Group”):

Akamai TechnologiesON Semiconductor
CienaPure Storage
F5Seagate Technology
Gen DigitalSplunk
Juniper NetworksTeledyne Technology
Keysight TechnologiesToast
Marvell TechnologyTrimble
Microchip TechnologyTwillio
NetAppZebra Technologies

The prior peer group, which was developed for fiscal year 2022 (the “FY2022 Peer Group”), consisted of 16 companies. Companies selected for each of the FY2024 Peer Group and the FY2022 Peer Group include five companies: Ciena, F5, Juniper Networks, NetApp, and Pure Storage. Companies added to the FY2024 Peer Group which were not in the FY2022 Peer Group include 13 companies: Akamai Technologies, Gen Digital, Keysight Technologies, Marvell Technology, Microchip Technology, ON Semiconductor, Seagate Technology, Splunk, Teledyne Technology, Toast, Trimble, Twillion, and Zebra Technologies. Companies which are not included in the FY2024 Peer Group but which were in the FY2022 Peer Group include 11 companies: Benchmark Electronics, Inc., Diebold Nixdorf, Inc., Extreme Networks, Inc. Infinera Corporation, Lumentum Holdings Inc., NETGEAR, Inc., Plexus Corp., Teradata Corporation, TTM Technologies, Inc., Viasat, Inc., and Vishay Intertechnology, Inc. Factors utilized by the Compensation Committee in evaluating peer companies for the FY2024 Peer Group generally included consideration of their prior fiscal year number of employees (the “Employee Data”); trailing 12 month revenue, year-over-year revenue growth, operating income, and net income (the “Financial Data”); market data such as 30 day average stock price, 20 day average market capitalization, and market capitalization as a multiple of revenue (the “Market Data”); and recent total shareholder return metrics on both a 1 year basis and 3 year compounded annual growth rate basis (the “TSR Data”). The Compensation Committee believed that due to significant changes and growth of the Company between fiscal year 2022 and fiscal year 2024 in each of the relevant factors of Employee Data, Financial Data, Market Data, and TSR Data, a significant change in peer group composition between fiscal year 2022 and fiscal year 2024 (as well as an increase in the size of the peer group utilized) were necessary, appropriate, and warranted.

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The Compensation Committee utilized for fiscal year 2024 the independent consultant report developed in July 2023. Recognizing that over-reliance on external comparisons can be of concern, the Compensation Committee used external comparisons as only one point of reference and was mindful of the value and limitations of comparative data. Before receiving Aon’s information and assistance in fiscal year 2024, the Compensation Committee assessed the independence of Aon in the light of all relevant factors, including additional services and other factors required by the SEC, that could give rise to a potential conflict of interest with respect to Aon. In connection with this review and assessment, and based on an independence letter provided by Aon in June 2023, the Compensation Committee noted that Aon had provided commercial risk insurance brokerage services to us for fiscal year 2022, for a fee of approximately $358,000. Aon’s fees charged to us for director and executive compensation services to us for fiscal year 2024 were approximately $102,000. The Compensation Committee considered such additionally provided services when evaluating Radford’s independence and potential conflicts of interest raised by Aon’s work and indicated it would take such services and fees under advisement in connection with its overall consideration of the advice provided by Radford with respect to executive officer compensation. However, the Compensation Committee did not identify any conflicts of interest raised by the work performed by Radford for fiscal year 2024. For fiscal year 2024, the decision to engage Aon for these other services was made by management, and the Compensation Committee did not approve such other services provided by Aon.

Key Fiscal Year 2024 Executive Compensation Decisions and Actions

Key fiscal year 2024 executive compensation decisions and actions included the following:

  • As a part of its philosophy to link compensation to corporate performance, the Compensation Committee adopted the FY2024 Performance Program for Other NEOs in January 2024, which program included each of the Company’s three Other NEOs (Mr. David Weigand, Mr. Don Clegg, and Mr. George Kao). The prior year’s FY2023 Performance Program for Other NEOs was comparable but had only included plans for two of the three Other NEOs (Mr. David Weigand and Mr. Don Clegg).

  • Similar to the structure of such performance program for the participating Other NEOs utilized in the prior fiscal year, the FY2024 Performance Program for Other NEOs utilized Base Salary and Fixed Bonus components, as well as a performance-based annual incentive award, which is payable in the form of service-based restricted stock units (“RSUs”) that generally vest over a period of four years and cash. The performance-based annual incentive award continues to have each of the following features:

◦Primarily formula-based;

◦Utilizes company performance metrics that are individualized based upon the role of the officer; and

◦Utilizes company performance metrics tied closely to stockholder value, including percentage appreciation in stock price from the prior fiscal year and percentage increase in worldwide revenue from the prior fiscal year. See “- FY2024 Performance Program for Other NEOs” below for more information.

  • As a part of continued efforts to evolve the approach to NEO compensation and to further improve the linkage of compensation to corporate performance for the Other NEOs, the Compensation Committee carefully re-evaluated the KPIs utilized under the performance-based portion of the FY2024 Performance Program for Other NEOs and the fixed bonus component of the FY2024 Performance Program for Other NEOs:

◦Under such program, the Compensation Committee determined, in addition to utilizing the same two KPIs for fiscal year 2024 as were utilized in fiscal year 2023 for Mr. Weigand (a Stock Price Increase KPI and a Long-Term Investor Increase KPI), to add a third KPI for Mr. Weigand (a Worldwide Revenue Growth KPI). The Compensation Committee believed such updated KPIs reflected the most relevant factors to measure the CFO’s performance in a manner that aligns with stockholder value and stockholder interests. The double weighting of 2x given to the two KPIs carried over from the prior fiscal year were unchanged between fiscal year 2023 and fiscal year 2024, and a single weighting of 1x was given to the third new Worldwide Revenue Growth KPI added for Mr. Weigand for fiscal year 2024. See “- FY2024 Performance Program for Other NEOs – Performance Incentive Award” below for more information.

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In addition, the Compensation Committee decided to leave unchanged the Fixed Bonus component for Mr. Weigand at 30% of his Base Salary for fiscal year 2024. See “- FY2024 Performance Program for Other NEOs – Fixed bonus component” below for more information.

◦Under such program, the Compensation Committee determined to utilize, in addition to the same three KPIs for fiscal year 2024 as were utilized in fiscal year 2023 for Mr. Clegg (a Worldwide Revenue Growth KPI, Top 3000 Customer Growth KPI and Slow Moving & Excess and Obsolete Inventory KPI (the “Inventory KPI”)), two additional new KPIs for Mr. Clegg (a Top 300 Customer Growth KPI and Stock Price Increase KPI). The Compensation Committee believed adding the new Top 300 Customer Growth KPI was an appropriate objective for a Senior Vice President of Worldwide Sales, since it focused him on additionally targeting larger customers, which is one of the Company’s key approaches to achieve rapid revenue growth, particularly with the emergence of new market opportunities (such as AI). In addition, the Compensation Committee believed adding the Stock Price Increase KPI for Mr. Clegg further aligned him with stockholder value and stockholder interests.

In addition, the Compensation Committee also determined for fiscal year 2024 to adjust the weightings of certain of the KPIs selected for Mr. Clegg. For example, while the Top 3000 Customer Growth KPI remained double weighted at 2x in Mr. Clegg’s program for fiscal year 2024 (similar to fiscal year 2023), the weightings of the two other KPIs carried over from fiscal year 2023 were increased. For the carry-over Worldwide Revenue Growth KPI, the weighting was increased from being triple weighted in fiscal year 2023 to being quadruple weighted in fiscal year 2024. For the carry-over Inventory KPI, the weighting was also increased from being double weighted in fiscal year 2023 to being quadruple weighted in fiscal year 2024. The increase in weightings was implemented to reflect the attention and focus the Compensation Committee wanted Mr. Clegg to give to these objectives in fiscal year 2024. Each of the new Top 300 Customer Growth KPI and Stock Price Increase KPI for Mr. Clegg for fiscal year 2024 are single weighted at 1x. See “- FY2024 Performance Program for Other NEOs – Performance Incentive Award” below for more information.

In addition, the Compensation Committee decided to leave unchanged the Fixed Bonus component for Mr. Clegg at 20% of his Base Salary for fiscal year 2024. See “- FY2024 Performance Program for Other NEOs – Fixed bonus component” below for more information.

  • As indicated above, fiscal year 2024 was the first year that Mr. George Kao, our Senior Vice President of Operations, was included in a performance program similar to the programs for the other two Other NEOs (Mr. David Weigand and Mr. Don Clegg). Under such program for Mr. Kao, the Compensation Committee determined to utilize two KPIs (a Worldwide Revenue Growth KPI and a Stock Price Increase KPI). The Compensation Committee selected such KPIs given the prior practice of utilizing such KPIs in the programs of Other NEOs in prior years (since this was the first year Mr. Kao was participating); and the Compensation Committee intends to re-evaluate such KPIs in future years based upon an assessment of the linkage of such KPIs to Mr. Kao’s role in contributing to the results of such KPIs. Similarly, given this was the first year Mr. Kao is participating in such a performance program, the Compensation Committee determined to single weight each of such KPIs at 1x for fiscal year 2024.

In addition, because fiscal year 2024 was the first year that Mr. Kao was included in such a performance program, the Compensation Committee decided to provide grant discretion to the CEO to set a Fixed Bonus component for Mr. Kao within a range of 16% to 35% of his Base Salary for fiscal year 2024. In exercising his discretion, the CEO set Mr. Kao’s Fixed Bonus component at the lower end of the range at 16% of his Base Salary for fiscal year 2024 and plans to re-evaluate such level in future years. See “- FY2024 Performance Program for Other NEOs – Fixed bonus component” below for more information.

  • The prior year’s performance program for Other NEOs utilized a subjective Individual Performance Evaluation KPI, which was evaluated by the CEO. For the FY2024 Performance Program for Other NEOs, the Compensation Committee re-characterized the Individual Performance Evaluation KPI as a compensation adjustment factor (the “Compensation Adjustment Factor”). While the Compensation Adjustment Factor is (similar to fiscal year 2023) subjective and evaluated by the CEO, the intention is for the CEO to not only consider subjective performance of each of the individual executives for this factor, but also for the CEO to have discretion to consider other external criteria in determining the applicable result, including circumstances compared to expectations, and make adjustments accordingly either up or down. The Compensation Committee has noted that in recent fiscal years, the Company’s

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performance has been highly volatile with respect to certain of the KPIs. For example: on June 30, 2023 (the last day of fiscal year 2023), our closing stock price was $24.93; on January 21, 2024, which was the date the Compensation Committee approved the FY2024 Performance Program for Other NEOs, our closing stock price was $45.74; during the course of fiscal year 2024, our closing stock price reached a high of $118.80 on March 28, 2024; and our closing stock price on June 28, 2024 (the last business day of fiscal year 2024) was $81.94. The Compensation Committee believed that, in light of such volatility, the CEO should have discretion (on behalf of the Compensation Committee) to select a lower (or higher) result for this factor to manage overall compensation for the Other NEOs, rather than having such factor based solely upon individual performance evaluations. As a result, this factor has been re-characterized as a Compensation Adjustment Factor.

  • Based on effective base salaries and the Compensation Committee’s review and certification of actual performance (as described further below) under the FY2024 Performance Program for Other NEOs for fiscal year 2024:

◦Mr. Weigand received a Fixed Bonus amount of $162,152 paid in semi-monthly installments during fiscal year 2024, and based on performance against fiscal year 2024 goals earned a cash payment of $110,060 and earned an aggregate grant of $440,239 in RSUs. These RSUs, once granted, generally vest in annual installments over four years from July 1, 2024;

◦Mr. Clegg received a Fixed Bonus amount of $89,744 paid in semi-monthly installments during fiscal year 2024, and based on performance against fiscal year 2024 goals earned a cash payment of $277,510 and earned an aggregate grant of $277,510 in RSUs. These RSUs, once granted, generally vest in annual installments over four years from July 1, 2024; and

◦Mr. Kao received a Fixed Bonus amount of $49,398 paid in semi-monthly installments during fiscal year 2024, and based on performance against fiscal year 2024 goals earned a cash payment of $88,751 and earned an aggregate grant of $88,751 in RSUs. These RSUs, once granted, generally vest in annual installments over four years from July 1, 2024.

  • Base salaries for the Other NEOs were also adjusted during fiscal year 2024 as a part of a perceived critical need to enhance retention value for key personnel, and were based in part upon:

◦Analyses provided in the compensation study for fiscal year 2024 which indicated that base salaries for each of Mr. Weigand and Mr. Clegg (prior to the increases) were significantly below the 25th percentile in the market. The compensation study, which was prepared in July 2023, did not include Mr. Kao. With the adjustments made during fiscal year 2024, the base salaries for each of Mr. Weigand and Mr. Clegg were generally only slightly below or at the 25th percentile in the market according to such study; and

◦Consideration of the continued inflationary market conditions in fiscal year 2024.

  • Fiscal year 2024 was the third full fiscal year in which the CEO operated under the 2021 CEO Performance Award, and related agreements, which was granted in March 2021. During the preceding fiscal years 2022 and 2023, four of the five tranches under the 2021 CEO Performance Award (representing 8,000,000 shares subject to the option) were earned. During fiscal year 2024, the Compensation Committee continued to closely monitor the Company’s performance and the CEO’s performance against not only the key metrics of the 2021 CEO Performance Award, but also the objectives of the 2021 CEO Performance Award, for alignment with stockholder value and stockholder interests. During fiscal year 2024, the CEO received a Base Salary of only $1, no short-term cash bonus awards, and no time-based or performance-based equity awards.

  • During fiscal year 2024, the fifth and final tranche under the 2021 CEO Performance Award (representing the final 2,000,000 shares subject to the option) was earned. More specifically:

◦The Company’s annualized revenue exceeded $8.0 billion (representing the fifth and final revenue goal under the 2021 CEO Performance Award) for the four quarters ended December 31, 2023. The trailing 60-trading-

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day average of closing prices of the Company’s Common Stock had reached $12.00 (representing the fifth and final stock price goal under the 2021 CEO Performance Award) during the prior fiscal year on May 30, 2023. Based upon the matching of the relevant revenue goal with the corresponding stock price goal, the Compensation Committee certified the vesting of the fifth and final 2,000,000 shares subject to the 2021 CEO Performance Award on February 12, 2024;

  • Given the progression of achievement under the 2021 CEO Performance Award, and in order to continue to motivate and incentivize Mr. Liang as our CEO, the Compensation Committee during the second quarter of fiscal year 2024 began consideration of another performance-based compensation arrangement for Mr. Liang. After consideration, the Compensation Committee believed that, given the increase in stockholder value following the issuance of the 2021 CEO Performance Award, it was in the best interests of the Company and its stockholders to grant to Mr. Liang a new long-term performance-based option award, which was the 2023 CEO Performance Award. The 2023 CEO Performance award is very similar in structure to the 2021 CEO Performance Award, but with new and even more challenging revenue and stock price goals. The 2023 CEO Performance Award was granted to Mr. Liang in November 2023. See “Discussion and Analysis of 2023 CEO Performance Award” for additional discussion with respect to the 2023 CEO Performance Award and the various goals thereunder. In connection with the 2023 CEO Performance Award, it was agreed that Mr. Liang would continue to receive a de minimis salary of $1 per annum (or such other non-waivable minimum wage requirement if deemed advisable) and no cash bonuses through the earlier of (1) the date all of the tranches under the 2023 CEO Performance Award shall have vested and (2) March 31, 2029. Previously, such restriction period ran through just June 30, 2026. Similar to the 2021 CEO Performance Award, Mr. Liang must also remain as the Company’s CEO (or such other position with the Company as Mr. Liang and the Board may agree) at the time each goal is met in order for the corresponding tranche to vest. This helps ensure Mr. Liang’s active leadership of the Company over the long term.

  • During the course of fiscal year 2024, as discussed further below, four of the five stock price goals under the 2023 CEO Performance Award were achieved. As of the end of fiscal year 2024, none of the revenue goals under the 2023 CEO Performance Award had been certified by the Compensation Committee as having been achieved, so none of the tranches under the 2023 CEO Performance Award had been earned. However, based upon revenues for the prior four quarters as of June 30, 2024 of $14,989.3 million reflected in the financial statements attached to this Annual Report, the $13.0 billion revenue goal had been achieved. The Company believes the Compensation Committee will certify the achievement of the first revenue goal, and the vesting of the first tranche under the 2023 CEO Performance Award (representing 1,000,000 of the 5,000,000 shares subject to such option) will occur shortly after the filing of this Annual Report. The Compensation Committee will continue to closely monitor the Company’s performance and the CEO’s performance against both the key metrics and objectives of the 2023 CEO Performance Award.

◦The trailing 60-trading-day average of closing prices of the Company’s Common Stock reached $45.00 (representing the first stock price goal under the 2023 CEO Performance Award) based upon the stock price from November 29, 2023 through February 26, 2024. The Compensation Committee certified such achievement on March 2, 2024;

◦The trailing 60-trading-day average of closing prices of the Company’s Common Stock reached $60.00 (representing the second stock price goal under the 2023 CEO Performance Award) based upon the stock price from December 15, 2023 through March 13, 2024. The Compensation Committee certified such achievement on April 1, 2024;

◦The trailing 60-trading-day average of closing prices of the Company’s Common Stock reached $75.00 (representing the third stock price goal under the 2023 CEO Performance Award) based upon the stock price from January 4, 2024 through April 1, 2024. The Compensation Committee certified such achievement on April 1, 2024; and

◦The trailing 60-trading-day average of closing prices of the Company’s Common Stock reached $90.00 (representing the fourth stock price goal under the 2023 CEO Performance Award) based upon the stock price from January 31, 2024 through April 25, 2024. The Compensation Committee certified such achievement on May 5, 2024.

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The Role of the Most Recent Stockholder Say-on-Pay Vote

The Compensation Committee, the entire Board, and our management value the opinions of our stockholders. Feedback received from stockholders has previously included both a desire that a more significant portion of executive compensation be tied to performance based upon the achievement of pre-established goals, as well as a favorable view of the design and structure of the 2021 CEO Performance Award intended to increase stockholder value and align with the interests of stockholders. For fiscal year 2024, the Compensation Committee continued to take such prior feedback into consideration when it developed, designed, and implemented each of the FY2024 Performance Program for Other NEOs (including the expansion of such program to all Other NEOs) and the 2023 CEO Performance Award.

Our last annual meeting of stockholders was held on January 22, 2024 (the “Fiscal Year 2023 Annual Meeting”), and we provided our stockholders the annual opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in the proxy statement for such meeting. At the meeting, stockholders representing approximately 97% of the stock present and entitled to vote on this “say-on-pay” proposal approved the compensation of our named executive officers. Although the say-on-pay vote was non-binding, the Compensation Committee expects to continue to consider the outcome of that vote when making future compensation decisions for our named executive officers.

Role of Executive Officers in the Compensation Process

Each year, management provides recommendations to the Compensation Committee regarding compensation program design and evaluations of executive and Company performance. In particular, in fiscal year 2024, both our Chief Executive Officer and Chief Financial Officer provided the Compensation Committee with their views on the merits of a performance-based compensation program for Other NEOs, and the design of such program (including components thereof such as Base Salary, short-term cash incentives, equity incentives, and the KPIs utilized under the performance-based portion of such program). The Compensation Committee believes the participation of such NEOs in the process which culminated in the adoption in fiscal year 2024 of the FY2024 Performance Program for Other NEOs, and the willingness of such Other NEOs to participate in the program, is evidence of the commitment of the Other NEOs to our Company and their confidence in our future.

In February 2025, our Chief Financial Officer provided the Compensation Committee with information about the Company’s performance against the objective metrics set forth in the FY2024 Performance Program for Other NEOs and the Chief Executive Officer provided the Compensation Committee with his subjective Compensation Adjustment Factor evaluation for the Other NEOs, which is part of the FY2024 Performance Program for Other NEOs. This evaluation provided by the CEO included his views as to the impact of individual Other NEOs on strategic initiatives and organizational goals, as well as their functional expertise and leadership, while also factoring in extrinsic considerations (such as share price volatility during the fiscal year). The CEO also provided the Compensation Committee with his views of the nature and extent of our performance against expectations.

While the Compensation Committee carefully considers all recommendations made by members of management, ultimate authority for all compensation decisions regarding our NEOs rests with the Compensation Committee and the Board.

Fiscal Year 2024 CEO Compensation

Overview

Fiscal year 2024 was the third full fiscal year in which the CEO’s compensation was governed by the 2021 CEO Performance Award and related agreements. In connection with the grant of the 2021 CEO Performance Award, Mr. Liang received a de minimis salary of $1 per year and no cash bonuses through June 30, 2026. Mr. Liang also had to remain as the Company’s CEO (or such other position with the Company as Mr. Liang and the Board may agree) at the time each goal was met in order for the corresponding tranche to vest. This helped ensure Mr. Liang’s active leadership of the Company over the long term.

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Discussion and Analysis of 2021 CEO Performance Award

On March 2, 2021, the Compensation Committee granted to our CEO, Mr. Liang, the 2021 CEO Performance Award, which was a long-term performance-based option award to purchase up to 10,000,000 shares of the Company’s common stock that vested in five equal tranches. Each of the five tranches vested if a specified revenue goal (each, a “Revenue Goal”) and a specified stock price goal (each, a “Stock Price Goal”) were achieved. Revenue Goals must have been achieved by June 30, 2026 (the “Revenue Performance Period”) and Stock Price Goals must have been achieved by September 30, 2026 (the “Stock Price Performance Period”). As of June 30, 2024, all five of the Revenue Goals and Stock Price Goals have been achieved, and the 2021 CEO Performance Award has fully vested.

The following table sets forth the Revenue Goals, which have all been achieved as of June 30, 2024:

Revenue Goals**(1)**Absolute Change From Revenue Reported for the Fiscal Year Ended Prior to the Grant of the CEO Performance Award (June 30, 2020)****(2)Achievement Status
$4.0 billion20%Achieved(3)
$4.8 billion44%Achieved(4)
$5.8 billion74%Achieved(5)
$6.8 billion104%Achieved(6)
$8.0 billion140%Achieved(7)

(1)Revenue means the Company’s total revenues, as reported by the Company in its financial statements on Forms 10-Q and 10-K filed with the SEC (but without giving effect to any rounding used in reporting the amounts in Form 10-Q and Form 10-K), for the previous four consecutive fiscal quarters of the Company.

(2)Achieved prior to fiscal year 2024. Revenue reported in the Company’s Form 10-K for the fiscal year ended June 30, 2020 was $3.34 billion.

(3)Achieved prior to fiscal year 2024. Revenue reported for the four quarters ended December 31, 2021 was $4.17 billion.

(4)Achieved prior to fiscal year 2024. Revenue reported for the four quarters ended June 30, 2022 was $5.20 billion.

(5)Achieved prior to fiscal year 2024. Revenue reported for the four quarters ended September 30, 2022 was $6.02 billion.

(6)Achieved at the end of fiscal year 2023 and certified during fiscal year 2024. Revenue reported for the four quarters ended June 30, 2023 was $7.1 billion.

(7)Achieved during fiscal year 2024. Revenue reported for the four quarters ended December 31, 2023 was $9.3 billion.

The following table sets forth the Stock Price Goals, which have all been achieved as of June 30, 2024:

Stock Price Goals**(1)**Absolute Change in Stock Price from Grant Date Stock Price**(2)**Absolute Change in Stock Price From $4.50 Exercise PriceAchievement Status
$4.5032%0%Achieved(3)
$6.0076%33%Achieved(4)
$7.50120%67%Achieved(5)
$9.50179%111%Achieved(6)
$12.00252%167%Achieved(7)

(1)Sustained stock price performance is required for each Stock Price Goal to be met, other than in connection with a change in control. For each Stock Price Goal to be met, the sixty-trading day average stock price must equal or exceed the Stock Price Goal.

(2)Utilizes closing stock price of $3.41 per share on March 2, 2021.

(3)Achieved prior to fiscal year 2024. The sixty-trading day average stock price from March 15, 2022 through June 8, 2022 was $4.51.

(4)Achieved prior to fiscal year 2024. The sixty-trading day average stock price from July 19, 2022 through October 11, 2022 was $6.02.

(5)Achieved prior to fiscal year 2024. The sixty-trading day average stock price from September 30, 2022 through December 23, 2022 was $7.54.

(6)Achieved prior to fiscal year 2024. The sixty-trading day average stock price from January 20, 2023 through April 17, 2023 was $9.51.

(7)Achieved prior to fiscal year 2024. The sixty-trading day average stock price from March 6, 2023 through May 30, 2023 was $12.09.

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Discussion and Analysis of 2023 CEO Performance Award

As indicated above, given the progression of achievement under the 2021 CEO Performance Award, and in order to continue to motivate and incentivize Mr. Liang as our CEO, the Compensation Committee during the second quarter of fiscal year 2024 began consideration of another performance-based compensation arrangement for Mr. Liang. This culminated in the grant of the 2023 CEO Performance Award in November 2023.

The 2023 CEO Performance Award granted to Mr. Liang is a long-term performance-based option award to purchase up to 5,000,000 shares of the Company’s common stock, which award may vest in five equal tranches. Each of the five tranches vests if a specified revenue goal (each, a “New Revenue Goal”) and a specified stock price goal (each, a “New Stock Price Goal”) is achieved. New Revenue Goals must be achieved by December 31, 2028 (the “New Revenue Performance Period) and New Stock Price Goals must be achieved by March 31, 2029 (the “New Stock Price Performance Period”). The 2023 CEO Performance Award was granted with an exercise price equal to $45.00 (the “New Exercise Price”), representing a premium of approximately 53% to the closing stock price reported on NASDAQ on the date of grant. The 2023 CEO Performance Award will generally expire on November 14, 2033 and includes, among other terms and conditions, a restriction on the sale of any shares issued upon exercise of the 2023 CEO Performance Award until November 14, 2026.

In an effort to continue to further incentivize Mr. Liang’s long-term performance, the Compensation Committee designed the 2023 CEO Performance Award to be a challenging long-term incentive for future performance, and the Compensation Committee noted in particular that the performance thresholds could take many years to achieve, if they can be achieved at all. In addition, the Compensation Committee sought to ensure that the 2023 CEO Performance Award would further align Mr. Liang’s interests with those of the Company’s stockholders over the long term. In the course of considering the 2023 CEO Performance Award, the Compensation Committee determined to modify the period that Mr. Liang would continue to receive a de minimis salary of $1 per annum (or such other non-waivable minimum wage requirement, if deemed advisable) and no cash bonuses through the earlier of (1) the date all of the tranches under the 2023 CEO Performance Award shall have vested and (2) March 31, 2029. Similar to the 2021 CEO Performance Award, Mr. Liang must also remain as the Company’s CEO (or such other position with the Company as Mr. Liang and the Board may agree) at the time each goal is met in order for the corresponding tranche to vest. This helps ensure Mr. Liang’s active leadership of the Company over the long term.

The following table sets forth the New Revenue Goals which must be achieved under the 2023 CEO Performance Award by the end of the New Revenue Performance Period of December 31, 2028, as well as their achievement status as of the date of this Annual Report:

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New Revenue Goals**(1)**Absolute Change From Revenue Reported for the Fiscal Year Ended Prior to the Grant of the 2023 CEO Performance Award (June 30, 2023)****(2)(3)Achievement Status
$13.0 billion82%Achieved(4)
$15.0 billion111%Not yet achieved
$17.0 billion139%Not yet achieved
$19.0 billion167%Not yet achieved
$21.0 billion195%Not yet achieved

(1)Revenue means the Company’s total revenues, as reported by the Company in its financial statements on Forms 10-Q and 10-K filed with the SEC (but without giving effect to any rounding used in reporting the amounts in Form 10-Q and Form 10-K), for the previous four consecutive fiscal quarters of the Company.

(2)Revenue reported in the Company’s Form 10-K for fiscal year 2023 was $7.12 billion.

(3)Rounded to the nearest whole percentage.

(4)Revenue reported in this Annual Report is approximately $14.99 billion. As of the date of this Annual Report, the Compensation Committee has not yet certified the achievement of the $13.0 billion revenue goal.

The following table sets forth the New Stock Price Goals which must be achieved under the 2023 CEO Performance Award by the end of the New Stock Price Performance Period of March 31, 2029, as well as their achievement status as of the date of this Annual Report:

New Stock Price Goals**(1)**Absolute Change in Stock Price from Grant Date Stock Price**(2)(3)**Absolute Change in Stock Price From $45.00 Exercise Price**(3)**Achievement Status
$45.0053%0%Achieved(4)
$60.00104%33%Achieved(5)
$75.00155%67%Achieved(6)
$90.00206%100%Achieved(7)
$110.00274%144%Not yet achieved

(1)Sustained stock price performance is required for each New Stock Price Goal to be met, other than in connection with a change in control. For each New Stock Price Goal to be met, the trailing sixty trading day average stock price must equal or exceed the New Stock Price Goal.

(2)Utilizes closing stock price of $29.39 on November 14, 2023.

(3)Rounded to the nearest whole percentage.

(4)The sixty-trading day average stock price from November 29, 2023 through February 26, 2024 was $45.70.

(5)The sixty-trading day average stock price from December 15, 2023 through March 13, 2024 was $61.07.

(6)The sixty-trading day average stock price from January 4, 2024 through April 1, 2024 was $75.28.

(7)The sixty-trading day average stock price from January 31, 2024 through April 25, 2024 was $90.31.

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Each of the five tranches vests only when both the applicable New Revenue Goal and New Stock Price Goal for such tranche are certified by the Compensation Committee as having been met.

A New Revenue Goal and a New Stock Price Goal that are matched together can be achieved at different points in time and vesting will occur at the later of the achievement certification dates for such New Revenue Goal and New Stock Price Goal. Subject to any applicable clawback provisions, policies or other forfeiture terms described in the 2023 CEO Performance Award, once a goal is achieved, it is forever deemed achieved for determining the vesting of a tranche.

There is no full acceleration of vesting of the 2023 CEO Performance Award as a result of a “change in control.” However, in connection with a change in control, whether any unvested tranches vest will depend solely on the Company’s attainment of the New Stock Price Goals (the New Revenue Goals will be disregarded). In addition, for purposes of determining whether the New Stock Price Goal has been achieved, the stock price shall equal the greater of (1) the most recent closing price per share immediately prior to the effective time of such change in control or (2) the per share common stock price (plus the per share of common stock value of any other consideration) received by the stockholders in the change in control.

As of the date of this Annual Report, none of the options granted under the 2023 CEO Performance Award has been earned, but, as stated above, the Company expects the Compensation Committee will certify the achievement of the first revenue goal, and the vesting of the first tranche under the 2023 CEO Performance Award (representing 1,000,000 of the 5,000,000 shares subject to such option) will occur shortly after the filing of this Annual Report. The Compensation Committee will continue to closely monitor the Company’s performance and the CEO’s performance against both the key metrics and objectives of the 2023 CEO Performance Award.

FY2024 Performance Program for Other NEOs

Overview

On January 23, 2024, after consultations with our CEO and consideration of such other factors as the Compensation Committee considered appropriate (including input received from the Compensation Committee’s compensation consultant and an executive compensation study described above), the Compensation Committee approved an executive compensation program for fiscal year 2024 for the Company’s three Other NEOs -- Mr. Weigand (the “CFO Compensation Program”), Mr. Clegg (the “SVP Sales Compensation Program”), and Mr. Kao (the “SVP Operations Compensation Program”).

The Compensation Committee believes the FY2024 Performance Program for Other NEOs furthers the Company’s executive compensation philosophy to link compensation to corporate and individual performance. The principal compensation elements of the FY2024 Performance Program for Other NEOs are:

  • Base Salary;

  • Fixed Bonus; and

  • Performance-based annual incentive award (“Performance Incentive Award”) which, for Mr. Weigand, is payable 20% in the form of cash (the “Performance Cash”) and 80% in the form of service-based PRSUs and, for each of Mr. Clegg and Mr. Kao, is payable 50% in the form of Performance Cash and 50% in the form of PRSUs. PRSUs earned, once granted, will generally vest in equal annual installments over a period of approximately four years.

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Base Salary

The following table sets forth Base Salaries for each of Mr. Weigand, Mr. Clegg and Mr. Kao at the end of each of fiscal year 2023 and 2024:

NamePrincipal Position During Fiscal Year 2024End of Fiscal Year 2023 Base Salary Rate**(1)(2)**End of Fiscal Year 2024 Base Salary Rate**(1)(2)**Base Salary % Change
David WeigandSenior Vice President, Chief Financial Officer and Chief Compliance Officer$520,969$547,0175.0%
Don CleggSenior Vice President, Worldwide Sales$435,652$453,0784.0%
George KaoSenior Vice President, Operations$395,816$411,6494.0%

(1)The Base Salary amounts actually paid to each NEO for fiscal year 2023 and 2024 are disclosed in the Summary Compensation Table.

(2)For each of fiscal years 2023 and 2024, salary amounts disclosed in the Summary Compensation Table for each NEO differ from the amounts disclosed in the table above because of the timing of adjustments made to Base Salary. For each of such fiscal years 2023 and 2024, such adjustments were effective October 1 of such fiscal year for each of Mr. Weigand and Mr. Clegg. For Mr. Kao, his adjustment for fiscal year 2023 was effective on January 1, 2023 and for fiscal year 2024 was effective on October 1, 2024. In addition, salary amounts disclosed in the Summary Compensation Table for such NEOs also include amounts for paid out vacation and sick days.

Adjustments to Base Salaries for each of Mr. Weigand, Mr. Clegg, and Mr. Kao were made during fiscal year 2024 after the Compensation Committee considered recommendations from the CEO. Primary factors the Compensation Committee considered in connection with these increases included the following:

  • Analyses provided in the compensation study for fiscal year 2024 which indicated that even after adjustments to base salaries for Mr. Weigand and Mr. Clegg made during the prior fiscal year 2023, the base salaries for such executive officers were still generally below the 25th percentile in the market. The compensation study, which was prepared in July 2023 by Aon, did not include Mr. Kao (the “FY2024 Compensation Study”). With the adjustments made during fiscal year 2024, based upon the fiscal year 2024 compensation study, the base salaries for Mr. Weigand and Mr. Clegg were generally only slightly below or at the 25th percentile in the market according to such study; and

  • Consideration of continuing inflationary market conditions in fiscal year 2024.

Fixed Bonus Component

Under the FY2024 Performance Program for Other NEOs, each of Mr. Weigand, Mr. Clegg and Mr. Kao is entitled to receive a Fixed Bonus component payable in semi-monthly installments in the form of cash, which is based upon a percentage of Base Salary. The Compensation Committee included the Fixed Bonus as a part of the FY2024 Performance Program for Other NEOs for their continued achievements and contributions to the Company, and in recognition that the base salaries of each of Mr. Weigand and Mr. Clegg are generally slightly below or at the 25th percentile in the market according to the FY2024 Compensation Study. The Compensation Study did not include Mr. Kao.

The Fixed Bonus percentage of Base Salary for fiscal year 2023 was 30% for Mr. Weigand and 20% for Mr. Clegg, which percentages remained unchanged between fiscal year 2023 and fiscal year 2024 for such NEOs. As discussed above, given that fiscal year 2024 was the first year that Mr. Kao was included in such a performance program, the Compensation Committee decided to provide discretion to the CEO to set a Fixed Bonus component for Mr. Kao within a range of 16% to 35% of his Base Salary for fiscal year 2024. In exercising his discretion, the CEO set Mr. Kao’s Fixed Bonus component at the lower end of the range at 16% of his Base Salary for fiscal year 2024 to align such amount more closely to the bonus amount Mr. Kao received in the prior fiscal year when he did not have a performance program, and plans to re-evaluate such level in future years.

The Compensation Committee decided to retain the Fixed Bonus component for the FY2024 Performance Program for Other NEOs because the Committee believed the aggregate total cash compensation for Mr. Weigand and Mr. Clegg, which equals the sum of (i) their base salaries effective on October 1, 2023, (ii) the amount of cash earned under the Fixed Bonus percentages, and (iii) the amount of cash the Committee believed would likely be earned under the cash portion of the Performance Incentive Award (see “- Performance Incentive Award” below), was likely to still be less than the market 50th

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percentile for comparable positions based upon the FY2024 Compensation Study. The FY2024 Compensation Study did not include Mr. Kao, but the Committee chose to provide Mr. Kao with a Fixed Bonus component to equate his compensation elements with those of Mr. Weigand and Mr. Clegg. The following table sets forth the total amount of Fixed Bonus received by such persons for fiscal year 2024:

NamePrincipal Position During Fiscal Year 2024Fiscal Year 2024 Fixed Bonus Received
David WeigandSenior Vice President, Chief Financial Officer and Chief Compliance Officer$162,152(1)
Don CleggSenior Vice President, Worldwide Sales$89,744(2)
George KaoSenior Vice President, Operations$49,398(3)

(1)For Mr. Weigand, the Fixed Bonus paid from July 1, 2023 to September 30, 2023 was determined based upon a Base Salary of $520,969 at the beginning of fiscal year 2023. The Fixed Bonus paid from October 1, 2023 to June 30, 2024 was determined based upon Mr. Weigand’s increase in Base Salary to $547,017.

(2)For Mr. Clegg, the Fixed Bonus paid from July 1, 2023 to September 30, 2023 was determined based upon a Base Salary of $435,652 at the beginning of fiscal year 2023. The Fixed Bonus paid from October 1, 2023 to June 30, 2024 was determined based upon Mr. Clegg’s increase in Base Salary to $453,078.

(3)For Mr. Kao, the Fixed Bonus paid from October 1, 2023 to June 30, 2024 was determined based upon Mr. Kao’s increase in Base Salary to $411,648.

Performance Incentive Award

Description of Performance Incentive Award. Under the Performance Incentive Award portion of the FY2024 Performance Program for Other NEOs, participants have the ability to earn Performance Incentive Awards based upon the achievement of certain specified KPIs and the CEO’s subjective evaluation under the Compensation Adjustment Factor for the fiscal year. Any Performance Incentive Awards earned by Mr. Weigand are payable 20% in cash and 80% in PRSUs, and any Performance Incentive Awards earned by either Mr. Clegg or Mr. Kao are payable 50% in cash and 50% in PRSUs. The cash portion of the award is paid out promptly after the amount of any Performance Incentive Award is determined and approved by the Compensation Committee following the end of the fiscal year, and the PRSUs are granted at approximately the same time, unless otherwise stated in this Annual Report. The number of PRSUs granted to the participants is determined by dividing the value of the PRSU portion of the Performance Incentive Award by an average closing price of our stock, as described in more detail below. These PRSUs generally vest in equal annual installments over a period of four years from the first day of the new fiscal year, so long as the individual continues to be employed. PRSUs for the annual award are (for purposes of administration of shares available under the Company’s amended and restated 2020 Equity and Incentive Compensation Plan (the “2020 Plan”)) capped for each of Messrs. Weigand, Clegg, and Kao at a level unlikely to be earned. In addition:

  • The amount of the earned Performance Incentive Award is determined as a multiple (the “Multiple”) of a base incentive target (calculated as a set percentage of Base Salary) set for each participant (the “Base Incentive Unit”).

  • The Base Incentive Unit for fiscal year 2024 was set at 10% of Base Salary for each of Messrs. Weigand and Clegg. For Mr. Kao, given fiscal year 2024 was the first year he participated in the performance program, the Compensation Committee granted discretion to the CEO to set the Base Incentive Unit for Mr. Kao within a range of 8% to 10% of Base Salary, and the CEO elected to set such percentage at the lower end of such range at 8% (but plans to re-evaluate such percentage in future years).

  • Each KPI and the Compensation Adjustment Factor contribute to the calculation of the Multiple, which is applied to the Base Incentive Unit to determine the total amount of the earned Performance Incentive Award:

◦For Mr. Weigand, the KPIs for fiscal year 2024 were based upon:

  • Percentage appreciation in Company stock price from June 30, 2023 to June 30, 2024, with a 100% increase in the stock price counting as 1.00 towards determination of the final aggregate Multiple;

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*This KPI is “double weighted,” meaning that such percentage increase in stock price is then multiplied by two, and that resulting percentage is then used in the calculation of the aggregate Multiple as described above and illustrated below;

  • Percentage increase in number of long-term investors in the Company from June 30, 2023 to June 30, 2024, with a 100% increase in the number of long-term investors counting as 1.00 towards the determination of the final aggregate Multiple; and

*Such KPI is also “double weighted,” meaning that such percentage increase is multiplied by two, and that resulting percentage is then used in the calculation of the aggregate Multiple as described above and illustrated below; and

  • Percentage increase in worldwide revenue from the prior fiscal year, with a 100% increase in revenue counting as 1.00 towards determination of the final aggregate Multiple;

*This KPI is “single weighted,” meaning that such percentage increase is then used in the calculation of the aggregate Multiple as described above and illustrated below.

◦For Mr. Weigand, a Compensation Adjustment Factor (on a scale from 1.0 to 5.0) was also given by the CEO for the fiscal year, with each 1.00 of rating counting as 1.00 towards determination of the final aggregate Multiple. See “- Key Fiscal Year 2024 Executive Compensation Decisions and Actions” above for additional discussion with respect to the Compensation Adjustment Factor.

The scores arising from these KPI results, and the performance evaluation, are then added together to determine the final aggregate Multiple that is applied to the Base Incentive Unit to determine the value of the Performance Incentive Award. For these purposes, long-term investors in the Company are defined as either (1) a new long-term investor with at least 1,000,000 shares (which represents approximately about 0.2% of the total number of shares outstanding) added during fiscal year 2024 or (2) an existing long-term investor who had increased its holdings by at least 50% during fiscal year 2024; provided, however, that index funds, hedge funds, and broker-dealers are excluded from the definition of long-term investors. A list of potential long-term investors at the end of fiscal year 2023 had been identified based upon certain SEC filings made by such investors, and the foregoing evaluation criteria was then applied to such list.

◦For Mr. Clegg, the KPIs for fiscal year 2024 are based upon:

  • Percentage increase in number of our internally measured top 3,000 customers (“Top 3,000 Customers”) from June 30, 2023 to June 30, 2024, with a 100% increase in the number of our Top 3,000 Customers counting as 1.00 towards determination of the final aggregate Multiple. For these purposes, new Top 3,000 Customers are identified based upon new customer accounts which were set up in our internal accounting system during fiscal year 2024 based upon approximately 900+ accounts which were targeted from our list of top 3,000 customers for marketing efforts in the fiscal year and identified for this metric;

*Such KPI is “double weighted,” meaning that such percentage increase is multiplied by two, and that resulting percentage is then used in the calculation of the aggregate Multiple as described above and illustrated below;

  • Percentage increase in the number of our internally measured top 300 customers (“Top 300 Customers”) from June 30, 2023 to June 30, 2024, with a 100% increase in the number of our Top 300 Customers counting as 1.00 towards determination of the final aggregate Multiple. For these purposes, new Top 300 Customers are identified based upon new customer accounts which were set up in our internal accounting system during fiscal year 2024.

*Such KPI is “single weighted,” meaning that such percentage is then used in the calculation of the aggregate Multiple as described above and illustrated below;

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  • Percentage increase in worldwide revenue from the prior fiscal year, with a 100% increase in revenue counting as 1.00 towards determination of the final aggregate Multiple;

*This KPI is “quadruple weighted,” meaning that such percentage increase in worldwide revenue is then multiplied by four, and that resulting percentage is then used in the calculation of the aggregate Multiple as described above and illustrated below. During the prior fiscal year 2023, Mr. Clegg had this same KPI, but it was “triple weighted.” The Compensation Committee believed it was appropriate to increase the weighting of this KPI to “quadruple weighted” for fiscal year 2024 given Mr. Clegg’s role as Senior Vice President, Worldwide Sales, as achievement against this metric has high correlation with the Company's stock price performance;

  • Change in Slow Moving & Excess and Obsolete Inventory KPI, or Inventory KPI, which is calculated by dividing slow moving and excess and obsolete inventory for fiscal year 2023 by slow moving and excess and obsolete inventory for fiscal year 2024, and subtracting 1.00 from such quotient;

*The Inventory KPI is “quadruple weighted,” meaning that such resulting number from the calculation described above is then multiplied by four, and that resulting number is then used in the calculation of the aggregate Multiple as described above and illustrated below; and

  • Percentage appreciation in Company stock price from June 30, 2023 to June 30, 2024, with a 100% increase in the stock price counting as 1.00 towards determination of the final aggregate Multiple;

◦This KPI is “single weighted,” meaning that such percentage increase in stock price is then used in the calculation of the aggregate Multiple as described above and illustrated below.

◦For Mr. Clegg, a Compensation Adjustment Factor rating (on a scale from 1.0 to 3.0) was also given by the CEO for the fiscal year, with each 1.00 of rating counting as 1.00 towards determination of the final aggregate Multiple. See “- Key Fiscal Year 2024 Executive Compensation Decisions and Actions” above for additional discussion with respect to the Compensation Adjustment Factor. While the scale of the Individual Performance Evaluation KPI utilized in the prior fiscal year was from 1.0 to 5.0, a tighter scale from 1.0 to 3.0 was utilized for the current fiscal year’s Compensation Adjustment Factor because of the addition of two new single weighted KPIs for Mr. Clegg which count towards the determination of the final aggregate Multiple (a Top 300 Customer Growth KPI and Stock Price Increase KPI). See “- Key Fiscal Year 2024 Executive Compensation Decisions and Actions” above for additional discussion of the two new KPIs for Mr. Clegg in fiscal year 2024.

◦For Mr. Kao, the KPIs for fiscal year 2024 are based upon:

  • Percentage appreciation in Company stock price from June 30, 2023 to June 30, 2024, with a 100% increase in the stock price counting as 1.00 towards determination of the final aggregate Multiple; and

*This KPI is “single weighted,” meaning that such percentage increase in stock price is then used in the calculation of the aggregate Multiple as described above and illustrated below; and

  • Percentage increase in worldwide revenue from the prior fiscal year, with a 100% increase in revenue counting as 1.00 towards determination of the final aggregate Multiple; and

*This KPI is “single weighted,” meaning that such percentage increase in worldwide revenue is then used in the calculation of the aggregate Multiple as described above and illustrated below.

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◦For Mr. Kao, a Compensation Adjustment Factor rating (on a scale from 1.0 to 3.0) was also given by the CEO for the fiscal year, with each 1.00 of rating counting as 1.00 towards determination of the final aggregate Multiple. See “- Key Fiscal Year 2024 Executive Compensation Decisions and Actions” above for additional discussion with respect to the Compensation Adjustment Factor.

The scores arising from these KPI results, and the Compensation Adjustment Factor are then added together to determine the final aggregate Multiple that is applied to the Base Incentive Unit to determine the value of the Performance Incentive Award.

A decrease in stock price, number of long-term investors, number of our Top 3,000 Customers, number of our Top 300 Customers, or worldwide revenue from the prior fiscal year (as may be applicable) results in a multiple of zero for that KPI for purposes of determining the aggregate Multiple. For these purposes, worldwide revenue is defined as our net sales for the fiscal year as reported in our consolidated financial statements. In addition, for Mr. Clegg, an increase in slow moving and excess and obsolete inventory from the prior fiscal year results in a multiple of zero for the Inventory KPI for purposes of determining the aggregate Multiple. Slow moving and excess and obsolete inventory apply written guidelines that have been established which, along with other considerations, primarily categorize products based upon various criteria (such as price sensitivity based upon age (e.g. CPUs, GPUs), volume/cost of product, and product lead time), and then for each such category define a time period after which they are considered slow moving.

Performance Cash earned is generally paid in the next payroll cycle following the Compensation Committee’s certification and approval of the calculation of the Performance Incentive Award after the end of the fiscal year, or as soon as reasonably practical thereafter.

Performance RSUs are to be granted to the respective participating officer on a grant date within 10 days of the Compensation Committee’s certification and approval of the results of the Performance Incentive Award (the “Grant Date”) subject to the recipient remaining employed with, or otherwise continuing to provide services to, the Company through such Grant Date. Due to the circumstances discussed in the Explanatory Note in this Annual Report, PRSUs earned by each officer for fiscal year 2024 under the Performance Incentive Award will not be granted to such respective participating officer until after the filing of this Annual Report in 2025. The number of PRSUs earned, once granted, will be determined by dividing the value of the portion of the Performance Incentive Award earned thereunder allocated to the PRSUs portion by the 60-trading day average closing stock price of the Company’s common stock as of (and including) the date immediately prior to the Grant Date (rounded to the nearest whole RSU, and subject to (for purposes of administration of shares available under the 2020 Plan) a maximum cap at a level unlikely to be earned.

Measurement of Fiscal Year 2024 Performance against the Performance Incentive Award. The following sets forth the determination of the Performance Incentive Award based upon fiscal year 2024 performance for Mr. Weigand:

Performance MeasureAchievementWeighting FactorFinal Weighted Score
Stock Price Increase KPI229% (or 2.29)(1)2X4.58
Long-Term Investor Increase KPI19% (or 0.19)(2)2X0.38
Worldwide Revenue KPI110% (or 1.10)(3)1X1.10
Compensation Adjustment Factor4.00(4)1X4.00
Total Multiple10.06
Base Incentive Unit$54,701.71
Final Earned Performance Incentive Award Value$550,299
Performance Cash Payout Value (20%)$110,060
PRSUs Payout Value (80%)$440,239
Number of PRSUs to be Granted(5)To be determined

(1)Our closing stock price on June 30, 2023 and June 28, 2024 (the last trading-day of the fiscal year) was $24.93 and $81.94, respectively.

(2)Utilizing the definition of long-term investor specified above, it was determined the number of Long-Term Investors increased from 72 to 86 during fiscal year 2024.

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(3)In our consolidated financial statements, we recorded revenues of $7.12 billion and $14.99 billion for fiscal year 2023 and fiscal year 2024, respectively.

(4)Based upon the CEO’s evaluation.

(5)RSUs are currently expected to be granted in 2025 based on the average 60-trading day closing stock price as of the grant date.

The following sets forth the determination of the Performance Incentive Award based upon fiscal year 2024 performance for Mr. Clegg:

Performance MeasureAchievementWeighting FactorFinal Weighted Score
Top 3,000 Customers KPI125% (or 1.25)(1)2X2.50
Top 300 Customers KPI106% (or 1.06)(2)1X1.06
Worldwide Revenue KPI110% (or 1.10)(3)4X4.40
Inventory KPI0% (or 0)(4)4X0.00
Stock Price Increase KPI229% (or 2.29)(5)1X2.29
Compensation Adjustment Factor2.00(6)1X2.00
Total Multiple12.25
Base Incentive Unit$45,307.81
Final Earned Performance Incentive Award Value$555,021
Performance Cash Payout Value (50%)$277,510
PRSUs Payout Value (50%)$277,510
Number of PRSUs to be Granted(7)To be determined

(1)Using the definition of new top 3,000 customer specified above, it was determined that 319 such customers were added during fiscal year 2024.

(2)Using the definition of new top 300 customer specified above, it was determined that 319 such customers were added during fiscal year 2024.

(3)In our consolidated financial statements, we recorded revenues of $7.12 billion and $14.99 billion for fiscal year 2023 and fiscal year 2024, respectively.

(4)The final weighted score for this performance measure was determined to be zero. In our consolidated financial statements, we recorded a $54 million increase in inventory reserve charges between fiscal year 2023 and fiscal year 2024.

(5)Our closing stock price on June 30, 2023 and June 28, 2024 (the last trading-day of the fiscal year) was $24.93 and $81.94, respectively.

(6)Based upon the CEO’s evaluation.

(7)RSUs are currently expected to be granted in 2025 based on the average 60-trading day closing stock price as of the grant date.

The following sets forth the determination of the Performance Incentive Award based upon fiscal year 2024 performance for Mr. Kao:

Performance MeasureAchievementWeighting FactorFinal Weighted Score
Stock Price Increase KPI229% (or 2.29)(1)1X2.29
Worldwide Revenue KPI110% (or 1.10)(2)1X1.10
Compensation Adjustment Factor2.00(3)1X2.00
Total Multiple5.39
Base Incentive Unit$32,931.89
Final Earned Performance Incentive Award Value$177,503
Performance Cash Payout Value (50%)$88,751
PRSUs Payout Value (50%)$88,751
Number of PRSUs to be Granted(4)To be determined

SMCI | 2024 Form 10-K | 153

(1)Our closing stock price on June 30, 2023 and June 28, 2024 (the last trading-day of the fiscal year) was $24.93 and $81.94, respectively.

(2)In our consolidated financial statements, we recorded revenues of $7.12 billion and $14.99 billion for fiscal year 2023 and fiscal year 2024, respectively.

(3)Based upon the CEO’s evaluation.

(4)RSUs are currently expected to be granted in 2025 based on the average 60-trading day closing stock price as of the grant date.

Other Equity-Based Incentive Compensation

While participants in the FY2024 Performance Program for Other NEOs are eligible to receive performance-based awards under the Performance Incentive Award portion of such program, such persons also continue to be eligible to receive other equity-based incentive compensation, along with other non-executive persons eligible for awards under the 2020 Plan. In continuing to award other equity-based incentive compensation to participants in the FY2024 Performance Program for Other NEOs, the Compensation Committee noted that the FY2024 Compensation Study indicated that the historical level of equity awards made had only moderate retention power, and that equity vehicles that included a mix of both time-based RSUs and PRSUs should be considered. As a result, the Compensation Committee elected to continue its practice of making regular periodic refresh grants of time-based equity incentives of RSUs as well as options to the NEOs participating in the FY2024 Performance Program for Other NEOs.

For such Other NEOs participating in the FY2024 Performance Program, the Compensation Committee views stock options and other equity-based awards as an important component of the total compensation. We believe that equity-based awards also align the interests of an NEO with those of our stockholders. They also provide NEOs a significant, long-term interest in our success and help retain key NEOs in a competitive market for executive talent. The 2020 Plan authorized the Compensation Committee to grant stock options and other equity-based awards to eligible NEOs. The number of shares owned by, or subject to equity-based awards held by, each NEO is periodically reviewed and additional awards are considered based upon a generalized assessment of past performance, expected future performance and the relative holdings of executive officers. In addition to equity-based awards made in connection with events such as promotions, the Compensation Committee has historically granted refresh equity awards to employees (including executive officers) on a two-year cycle. Periodically, and generally based on the recommendation of the CEO, the Compensation Committee has made off-cycle special recognition equity awards of options and/or RSUs to NEOs.

For fiscal year 2024, in addition to the 2023 CEO Performance Award discussed above under “- Discussion and Analysis of 2023 CEO Performance Award” and PRSUs granted to Other NEOs discussed above under “- Performance Incentive Award,” the Compensation Committee determined to provide the awards of service-based stock options and RSUs to NEOs as outlined in the table below.

NameType of AwardQuantity (at Target) of AwardRationale for Providing the Award
David WeigandStock Options(1)150,000Recognition grant
RSUs(2)20,000Recognition grant
RSUs(3)20,460Performance grant
RSUs(3)4,330Performance grant
Stock Options(4)62,550Refresh grant
RSUs(5)23,770Refresh grant
Don CleggRSUs(2)10,000Recognition grant
RSUs(3)3,200Performance grant
RSUs(3)2,650Performance grant
Stock Options(4)54,210Refresh grant
RSUs(5)20,600Refresh grant
George KaoRSUs(2)10,000Recognition grant

(1)Such stock option grant, made on August 11, 2023, was part of a special recognition option award made to selected individual employees which included Mr. Weigand. This grant to Mr. Weigand was made, consistent with prior practice over recent years, in connection with other special recognition option rewards and vests at the rate of 1/8th of the shares subject to the stock option on the first quarter following the vesting commencement date on November 11, 2023, and thereafter at a rate of 1/8th of the shares subject to the stock option at the end of each successive calendar quarter. This stock option grant was intended to recognize and currently reward the Company’s general assessment of awardees’ (including Mr. Weigand’s) recent collective achievement for and contributions to the Company. The CEO made the recommendation on the size of grant for Mr. Weigand and other selected employees to the Committee based on his subjective assessment of their contributions to the Company. For context,

SMCI | 2024 Form 10-K | 154

Company-wide, an aggregate of 890,000 stock options were granted in connection with this special recognition stock option grant to approximately 10 employees, with stock option awards ranging in size up to a maximum of 200,000 shares. The average stock option award was for 89,000 stock options, and (based upon the recommendation of the CEO) an aggregate of 10 employees received option awards of 10,000 shares or more.

(2)Such grants of RSUs, made on August 11, 2023, were part of a special recognition grant made to a broad set of employees which included Messrs. Weigand, Clegg, and Kao. These grants, consistent with prior practices over recent years to these same NEOs in connection with other broad-based special recognition rewards, vested with regard to 50% of the award on August 15, 2023, and 50% of the award on February 15, 2024, and were intended to recognize and currently reward the Company’s general assessment of awardees’ recent collective achievement for and contributions to the Company. The CEO made the recommendation on size of grants for the Other NEOs to the Committee based on his subjective assessment of their contributions to the Company. For context, Company-wide, an aggregate of 1,866,810 RSUs were granted in connection with this special recognition grant to approximately 1,472 employees, with awards ranging in size up to a maximum of 40,000 units. The average award was for 1,270 RSUs, and (based upon the recommendation of the CEO) an aggregate of 29 employees received awards of 10,000 RSUs or more.

(3)Such RSUs were earned by Messrs. Weigand and Clegg as payouts pursuant to their Performance Incentive Awards under the FY2023 Performance Program for Other NEOs. See the Compensation Discussion & Analysis discussion in the prior year proxy statement for additional information. The RSUs were granted on August 24, 2023 and August 25, 2023, and vest at an annual rate of 25% per year commencing July 1, 2024, with the final installment vesting on July 1, 2027.

(4)Such stock options were part of Mr. Weigand’s and Mr. Clegg’s regular, periodic refresh grant cycle, and were granted on May 3, 2024, with a 10-year term and an exercise price equal to the closing market price of our common stock on the grant date ($78.27). Subject generally to their continued service, such stock options vest and become exercisable at the rate of 25% of the shares subject to the stock option on May 3, 2025, and then an additional 1/16th of the shares at the end of each successive calendar quarter thereafter. The particular size of the stock option grant to them was determined based upon the recommendation of Mr. Liang, which was reviewed and approved by the Compensation Committee.

(5)Such RSUs were part of Mr. Weigand’s and Mr. Clegg's regular periodic refresh grant cycle and were granted on May 3, 2024. These RSUs generally vest at the rate of 25% of the total number of units on May 10, 2025, and then an additional 1/16th of the units at the end of each successive calendar quarter thereafter. The particular size of the RSU grant to them was determined based upon the recommendation of Mr. Liang, which was reviewed and approved by the Compensation Committee.

Stock Ownership Guidelines

In January 2022, our Board adopted stock ownership guidelines that apply to the CEO and our non-executive directors (the “Guidelines”). Under the Guidelines, the CEO has a target holding of three times his then-current annual Base Salary; provided, however, that for so long as the CEO is Mr. Charles Liang, and his then-current annual Base Salary is less than his annual Base Salary as in effect immediately prior to the grant of his 2021 CEO Performance Award on March 2, 2021 (which annual Base Salary was $522,236 (the “Pre-grant CEO Salary”)), then for purposes of determination of the Chief Executive Officer’s target holding, his target shall be three times the Pre-grant CEO Salary. Under the Guidelines, non-employee directors have a target holding of three times the then-current annual Board member retainer (regardless of whether such director actually receives such retainer). For purposes of determining such target holding for non-employee directors, other director cash fees such as fees for Committee member/chair service or excess per meeting fees are not considered as part of the then-current annual Board member retainer.

Under the Guidelines, each target is expected to be attained by the later of (1) five years from the effective date of the Guidelines or (2) five years from the effective date of a covered person’s assumption of the applicable role or responsibilities (or applicable designation as a covered person with a specific stock ownership target by the Compensation Committee) subjecting the covered person to the then-applicable stock ownership target. After the applicable five-year period has concluded, the covered person will be required to retain at least 50% of the common stock received (net of applicable withholding taxes) under our equity awards earned by, vested with respect to or exercised by the covered person if the covered person does not comply with his or her stock ownership target. Once a covered person has initially achieved his or her stock ownership target, the covered person will be considered to continue to be in compliance with the Guidelines unless as of the annual measurement the covered person’s common stock ownership drops to less than 85% of the covered person’s stock ownership target (in which case the covered person will have one year to again achieve compliance with the Guidelines).

Annual compliance with the stock ownership target will be measured, for each fiscal year, at the end of such fiscal year. Compliance with the stock ownership targets at any point in time will be based on the average closing price for the common stock for the immediately prior 60 days. For purposes of determining compliance with the stock ownership target, the following holdings by the covered person and his or her immediate family members sharing his or her household will be considered the equivalent of owning the corresponding applicable underlying common stock: (1) outright ownership of common stock; (2) vested common stock held in retirement or deferred compensation accounts; and (3) service-based restricted share, restricted stock unit and/or deferred share awards regarding common stock (whether or not vested).

As of June 30, 2024, each of the covered persons subject to the Guidelines met his or her stock ownership target.

SMCI | 2024 Form 10-K | 155

Stock Retention Policy

We have adopted a stock retention policy which requires that our CEO hold a significant portion of the shares of our common stock acquired under our equity incentive plans for at least 36 months. Generally, under the policy, the CEO must retain at least 50% of all “net” shares received (“net” shares means those shares remaining after the sale or withholding of shares in payment of the exercise price, if applicable, and withholding taxes) for at least 36 months following the date on which an equity award is vested, settled or exercised, as applicable. In addition, in connection with the 2023 CEO Performance Award granted to our CEO in fiscal year 2024, the Board required a restriction on the sale of any shares issued upon the exercise of the options associated with such award until November 14, 2026. See “Discussion and Analysis of 2023 CEO Performance Award.”

Policies and Practices Regarding the Grant of Equity Awards

Under our policies and practices, the approval of stock options and other equity-based awards (including any stock option grants to our NEOs and directors) is typically provided at a Compensation Committee meeting or via unanimous written consent on the part of the Compensation Committee. While the Compensation Committee does not have predetermined fixed dates upon which grants must be made, generally, the Compensation Committee has held regular quarterly meetings (which are typically held after the completion of a fiscal quarter and shortly (usually approximately one week) before the announcement by the Company of its results for the just completed fiscal quarter (each, a “Regular Quarterly Meeting”)), and at such meeting the Committee considers the approval of stock options and other equity-based awards, including relevant terms (such as the proposed grant date). In addition to Regular Quarterly Meetings, the Compensation Committee, generally, may consider from time to time, on an as-needed basis, grants of stock options and other equity-based awards in between Regular Quarterly Meetings at special meetings or via unanimous written consent (together, “Special Meetings”).

Awards of stock options and other equity-based awards are typically made by the Company in the following circumstances:

1.Biennial awards: Generally, eligible employees (including our NEOs) receive equity-based awards (which may include stock options) in connection with their commencement of service with the Company or a change in their status occurs for them to become eligible for equity-based awards. Such awards are generally submitted to the Compensation Committee for approval at the first Regular Quarterly Meeting after the commencement of service by such employee or the change in such employee’s status occurs. Thereafter, such employee would, depending upon factors such as performance, generally be eligible to receive a refresh equity-based award (which may include stock options) at the biennial Regular Quarterly Meeting following the date the first award was made to such eligible employee (all such awards, “Biennial Awards”);

2.Scheduled Awards: The Compensation Committee also considers various scheduled awards which generally occur on a regular recurring basis (together, “Scheduled Awards”). Examples of such Scheduled Awards include:

a.The grant of the equity component of director compensation in connection with annual director service (the “Annual Director Service Award”) or lead independent director service (the “Lead Independent Director Service Award”). Such awards may include the grant of stock options depending upon the election made by such director at a time when the Trading Window (as defined below) was open. See “Director Compensation” for additional discussion with respect to such equity awards for director service.

Annual Director Service Awards will (going forward) generally be considered by the Compensation Committee for approval at the first Regular Quarterly Meeting after the commencement of a new fiscal year.

Lead Independent Director Service Awards are generally submitted to the Compensation Committee for approval at the first Regular Quarterly Meeting following the appointment of a lead independent director for their one-year term of office.

b.The grant of equity awards earned under the performance program for a NEO (which, to date, has not included stock options) (“Performance Award Grants”). Such awards generally have terms that were pre-approved by the Compensation Committee at the time the performance program for the named executive officer was adopted by the Compensation Committee earlier in such fiscal year, including specified deadline dates prior to which such Performance Awards Grants are to be made and after which the results used to determine performance (some of which may depend upon financial results that are published in the Annual

SMCI | 2024 Form 10-K | 156

Report) are calculated. Generally, the grant date of Performance Award Grants has been at a time when the Trading Window is open.

  1. Special Awards: From time to time, the Compensation Committee will consider, on an as-needed basis, grants of equity based-awards (which may include stock options). Circumstances for such awards may include, as an example, special recognition bonuses or for the hiring or retention of a high-value employee (who may or may not be an NEO). Such awards and the terms thereof (“Special Awards”) are generally submitted at Special Meetings but may also occur at Regular Quarterly Meetings.

The Company has an Insider Trading Policy which provides for a trading window (the “Trading Window”). Pursuant to the Insider Trading Policy, the Trading Window generally (i) opens following the closing of trading on the second full trading day following the public issuance of the Company’s earnings release for the most recent fiscal quarter and (ii) closes at the close of trading on the last day of the month preceding the last month of a fiscal quarter (i.e., the last day of August, November, February and May). Our Insider Trading Policy prohibits any of our directors, executive officers, employees or contractors from engaging in any transactions in publicly traded options, such as puts and calls, and other derivative securities, including any hedging or similar transaction, with respect to our common stock.

The Company has generally tied the grant date of options to NEOs for their Biennial Awards to the first full trading day after the next opening of the Trading Window following the Regular Quarterly Meeting approving such grant. Other key terms of such awards (such as exercise price) are tied to such grant date. For example, during fiscal year 2024, each of Mr. Weigand and Mr. Clegg received their Biennial Awards that included both stock options and RSUs as a part of their refresh grants. See “- Other Equity-Based Incentive Compensation.” Such awards were approved at the April 23, 2024 Regular Quarterly Meeting and the Company issued its earnings release for the third quarter of fiscal year 2024 on April 30, 2024. The first full trading day after the Trading Window opened was May 3, 2024, the grant date of both the options and RSUs for such Biennial Awards was May 3, 2024, and the exercise price of the stock options associated therewith was the closing stock price on May 3, 2024. However, for persons who are not NEOs, the grant date of stock options for their Biennial Awards is the date of the Regular Quarterly Meeting approving such grant, and other key terms of such awards (such as the exercise price of any stock options granted) are tied to such grant date. For example, for persons who are not NEOs and also had Biennial Awards approved at the Regular Quarterly Meeting held on April 23, 2024, the grant date of their stock options and RSUs was April 23, 2024, and the exercise price of the stock options associated therewith was the closing stock price on April 23, 2024.

Going forward, the Company generally expects to tie the grant date of stock options (if any) in connection with Annual Director Service Awards and Lead-Independent Director Service Awards to the first full trading day after the next opening of the Trading Window following the Regular Quarterly Meeting approving such grant. Other key terms of such awards (such as the exercise price of any stock options granted) will be tied to such grant date. For example, the Compensation Committee considered and approved grants for fiscal year 2025 director service at the Regular Quarterly Meeting held on July 30, 2024 and the Company issued its earnings release for the fourth quarter of fiscal year 2024 on August 6, 2024. Since the first full trading day after the Trading Window opened was August 9, 2024, the grant date of both the stock options and RSUs for Annual Director Service Awards was August 9, 2024, and the exercise price of the stock options associated therewith was the closing stock price on August 9, 2024. However, for fiscal year 2024, because the new director compensation program was approved by the Board on August 24, 2023, at a time when the Trading Window was open, the Annual Director Service Awards for fiscal year 2024 Board service were both approved by the Compensation Committee and had a grant date of August 24, 2023. Other key terms of such awards (such as exercise price) were tied to such grant date.

Generally, given the structure of Performance Award Grants, Performance Award Grants have been considered, approved, and granted by the Compensation Committee at a time when the Trading Window has been open.

The Company generally expects the grant date of options (if any) in connection with Special Awards to be tied to whether the Trading Window is open at the time of the Special Meeting at which such Special Award was considered and approved. In the event the Trading Window is not open at the time of the Special Meeting, the Company generally expects such Special Award to be granted on the first full trading day after the next opening of the Trading Window following the Special Meeting approving such grant. In the event the Trading Window is open at the time of the Special Meeting, the Company generally expects such Special Award to be granted on the date of the Special Meeting. In either case, other key terms of such awards (such as exercise price) are tied to such grant date. For example, during fiscal year 2024, Mr. Weigand received a recognition grant as a Special Award that included both stock options and RSUs. See “- Other Equity-Based Incentive Compensation.” Such awards were approved at the Regular Quarterly Meeting held on August 1, 2023, at a time when the Trading Window was closed and the Company issued its earnings release for the fourth quarter of fiscal year 2023 on August 8, 2023. The first full trading day after the Trading Window opened was August 11, 2023, so the grant date of both the stock options and RSUs for such Special Award was August 11, 2023, and the exercise price of the stock options associated therewith was the closing stock price on August 11, 2023.

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The equity grant approach discussed above is used by the Compensation Committee in order to best help ensure that grants are made only during an open window, and after the release of the Company’s material non-public information regarding its most recently completed fiscal quarter. This grant timing is used in order to provide for a routine and regular grant practice regarding the NEOs' and directors’ equity awards, but to clearly have such awards granted after the release of such recently completed fiscal quarter information. In this sense, the Compensation Committee is mindful of the existence of material non-public information about the prior fiscal quarter but is neutral with respect to the existence (or lack thereof) of other material non-public information, when making each of the types of awards discussed. Otherwise, the Compensation Committee does not factor any material non-public information into its design and approval of the terms of such equity awards discussed. Including for grants made during fiscal year 2024, we do not time the disclosure of material non-public information for purposes of affecting the value of executive compensation or director compensation.

During fiscal year 2024, except as provided in the chart below, we did not grant stock options (or similar awards) to any of our NEOs during the period beginning four business days before and ending one business day after the filing of any Company periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of any Company Form 8-K that disclosed any material non-public information:

NameGrant dateNumber of securities underlying the awardExercise price of the award ($/Share)Grant date fair value of the awardPercentage change in the closing market price of the securities underlying the award between the trading day ending immediately prior to the disclosure of material nonpublic information and the trading day beginning immediately following the disclosure of material nonpublic information
(a)(b)(c)(d)(e)(f)
Charles LiangN/AN/AN/AN/AN/A
David WeigandMay 3, 202462,550$78.27$48.424.7%
Don CleggMay 3, 202454,210$78.27$48.424.7%
George KaoN/AN/AN/AN/AN/A

Clawback Policy

Prior to calendar year 2023, we established a recoupment policy applicable to our NEOs (the “Recoupment Policy”). Under the Recoupment Policy, if we are required to prepare an accounting restatement due to material noncompliance with the financial reporting requirements under United States securities laws, the Compensation Committee shall be entitled to have the Company recover from any current or former executive officer any excess incentive-based compensation received by such person during the three-year period prior to the date on which we are required to prepare the restatement. This Recoupment Policy applied to both equity-based and cash-based incentive compensation awards. The “excess incentive-based compensation” is the difference between the actual amount that was paid, and the amount that would have been paid under the restated financial results.

SMCI | 2024 Form 10-K | 158

During fiscal year 2024, in light of new rules promulgated by Nasdaq National Market and SEC requirements, we adopted a new compensation clawback policy effective October 25, 2023 (the “New Clawback Policy”) which complies with the required standards. The New Clawback Policy provides for the prompt recovery or clawback of certain excess incentive-based compensation received during an applicable three-year recovery period by current or former executive officers in the event we are required to prepare an accounting restatement due to the material noncompliance with any financial reporting requirement under the securities laws. This includes restatements to correct an error in previously issued financial statements that is material to such previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Excess incentive-based compensation for these purposes generally means the amount of incentive-based compensation received (on or after October 2, 2023) by such executive officer that exceeds the amount of incentive-based compensation that would have been received by such executive officer had it been determined based on the restated amounts, without regard to any taxes paid. Incentive-based compensation potentially subject to recovery under the New Clawback Policy is in general limited to any compensation granted, earned or vested based wholly or in part on the attainment of one or more financial reporting measures. In general, we may utilize a broad range of recoupment methods under the New Clawback Policy. The New Clawback Policy does not condition clawback on the fault of the executive officer, but we are not required to clawback amounts only in limited circumstances where the Compensation Committee has made a determination that recovery would be impracticable and (1) we have already attempted to recover such amounts but the direct expenses paid to a third party in an effort to enforce the New Clawback Policy would exceed the amount to be recovered, (2) the recovery of amounts would violate applicable home country law, or (3) the recovery would cause the non-compliance of a tax-qualified retirement plan under the Internal Revenue Code and applicable regulations. Amounts received prior to the adoption of the New Clawback Policy continue to be governed by the Recoupment Policy. We may not indemnify any such executive officer against the loss of such recovered compensation.

Other Benefits

Health and Welfare Benefits. Our NEOs receive the same health and welfare benefits as are offered to our other employees, including medical, dental, vision, life, accidental death and dismemberment and disability insurance coverage, flexible spending account participation and holiday pay. The same contribution amounts, percentages and plan design provisions are applicable to all employees. We offer these health and welfare benefits generally to help provide a competitive compensation package to employees to assist with the attraction, hiring and retention of employees.

Retirement Program. Our NEOs may participate in the same tax-qualified, employee-funded 401(k) plan that is offered to all our other employees. We do not maintain a supplemental executive retirement plan, nor do we offer any defined benefit retirement plans or other defined contribution plans to our NEOs. We offer these retirement program benefits generally to help provide a competitive compensation package to employees to assist with the attraction, hiring and retention of employees.

Perquisites. We do not provide perquisites or personal benefits to any of our NEOs.

Employment Arrangements, Severance and Change of Control Benefits. We have not entered into employment agreements with any of our NEOs. Each of Messrs. Clegg, Kao and Weigand currently has a signed offer letter which provides for at-will employment. Each such offer letter provides for an initial Base Salary rate, an initial stock option grant and rights to participate in our employee benefit plans as described above. We do not have any written employment arrangements with Mr. Liang. Other than as described in the following sentence, we do not have any arrangements with any of our NEOs that provide for any severance or other benefits in the event of termination or change of control of our Company. See also - “Fiscal Year 2023 Potential Payments Upon Termination or Change of Control.” The 2023 CEO Performance Award has certain provisions related to the treatment of such award in the event of a change of control of our Company. See “Discussion and Analysis of 2023 CEO Performance Award.”

Tax and Accounting Considerations. In our review and establishment of named executive officer compensation programs and payments, we generally consider, but do not place substantial emphasis on, the anticipated accounting and tax treatment of our compensation programs to us and our NEOs. Among other factors that receive greater consideration are the net costs to us and our ability to effectively administer executive compensation in the short and long-term interests of stockholders.

Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), generally limits a Company’s ability to deduct for tax purposes compensation in excess of $1.0 million paid in any single tax year to certain executive officers (and, since 2018, certain former executive officers). We expect to continue to design and maintain executive compensation arrangements that we believe will attract and retain the executive talent that we need to compete successfully, even if in certain cases such compensation is not deductible for federal income tax purposes.

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We account for equity compensation paid to our employees in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock-Compensation (“ASC Topic 718”), which requires us to estimate and record expenses for each award of equity compensation over the service period of the award.

We intend that our plans, arrangements and agreements will be structured and administered in a manner that complies with (or is exempt from) the requirements of Section 409A of the Code. Participation in, and compensation paid under, our plans, arrangements and agreements may, in certain instances, result in the deferral of compensation that is subject to the requirements of Section 409A. If our plans, arrangements and agreements as administered fail to meet certain requirements under or exemptions from Section 409A, compensation earned thereunder may be subject to immediate taxation and tax penalties.

Summary

The Compensation Committee believes that our compensation philosophy and programs are designed to foster a performance-oriented culture that aligns our named executive officers’ interests with those of our stockholders. The Compensation Committee also believes that the compensation of our named executive officers is both appropriate and responsive to the goal of building stockholder value.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) with our management. Based on this review and these discussions, the Compensation Committee recommended to the Board that the CD&A be included in this Annual Report.

This report has been furnished by the Compensation Committee.

Sherman Tuan, Chair

Daniel Fairfax

Tally Liu

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Fiscal Year 2024 Summary Compensation Table

The following table sets forth information concerning the reportable compensation for our NEOs for the fiscal years ended 2024, 2023 and 2022, as applicable.

FISCAL YEAR 2024 SUMMARY COMPENSATION TABLE

Name and Principal PositionYearSalary ($)****(1)Bonus ($)****(2)Stock Awards ($)****(3)Option Awards ($)****(4)Non-Equity Incentive Plan Compensation ($)****(5)All Other Compensation ($)****(6)Total ($)
Charles Liang20241——28,094,976—25028,095,227
President, Chief Executive Officer and Chairman of the Board20231—————1
20221—————1
David Weigand2024540,505191,2453,456,6175,254,101110,0602509,552,778
Senior Vice President, Chief Financial Officer and Chief Compliance Officer2023522,151148,5681,021,243—167,127—1,859,089
2022442,601285,050353,4041,074,00548,973—2,204,033
Don Clegg2024448,722112,8172,295,6022,624,889277,5102505,759,790
Senior Vice President, Worldwide Sales2023449,46988,888331,660—157,923—1,027,940
2022398,470221,620183,65398,700166,250—1,068,693
George Kao2024407,69168,823343,181—88,751250908,696
Senior Vice President, Operations2023394,81314,362322,566269,815——1,001,556
2022364,40945,980————410,389

(1)Amounts disclosed under "Salary" for fiscal year 2024 include leave pay earned by the named executive officers.

(2)Amounts disclosed under “Bonus” for fiscal year 2024 reflect, as applicable, fixed amount bonuses, special bonuses, profit sharing amounts, holiday bonuses and/or our sales bonus program, all as further described above in the CD&A.

(3)Amounts disclosed for fiscal year 2024 represent the grant date fair values of RSU awards granted during fiscal year 2024 calculated in accordance with ASC Topic 718 and are based on the closing market price of our common stock on the date of grant. Amounts also include the fair values of the PRSU portion of Messrs. Weigand, Clegg, and Kao’s Performance Incentive Award provided for fiscal year 2024, based on probable outcome, as of January 2024. The PRSU portion of each award was capped at a level unlikely to be earned. The actual number of PRSUs earned by Messrs. Weigand, Clegg and Kao for their Performance Incentive Awards are expected to be granted in 2025, as disclosed in CD&A above.

(4)The amount disclosed for fiscal year 2024 represents the grant date fair values of the stock option award calculated in accordance with ASC Topic 718, using the Black Scholes option pricing model for Messrs. Weigand and Clegg, and Monte Carlo simulation for the 2023 CEO Performance Award . Assumptions used in the calculation of this amount are included in Part II, Item 8, "Financial Statements and Supplementary Data", and , Note 10 “Stock-based Compensation and Stockholders’ Equity” in the Notes to the Consolidated Financial Statements for fiscal year 2024 included in this Annual Report.

(5)Amounts disclosed for fiscal year 2024 represent payouts of the cash portion of Messrs. Weigand, Clegg, and Kao’s Performance Incentive Awards for fiscal 2024, as further described above in CD&A.

(6)Amounts for fiscal year 2024 represent a gift card provided to each of Messrs. Liang, Weigand, Clegg, and Kao.

SMCI | 2024 Form 10-K | 161

Fiscal Year 2024 Grants of Plan-Based Awards

The following table provides information concerning all plan-based awards granted during fiscal year 2024 to each of our NEOs, which grants were made under the 2020 Plan.

FISCAL YEAR 2024 GRANTS OF PLAN-BASED AWARDS TABLE

Estimated Possible Payouts Under Non-Equity Incentive Plan AwardsEstimated Possible Payouts Under Equity Incentive Plan AwardsAll Other Stock Awards: Number of Shares of Stock or Units (#)All Other Option Awards: Number of Securities Underlying Options (#)Exercise or Base Price of Option Awards ($/Sh)Grant Date Fair Value of Stock and Option Awards ($)****(1)
NameGrant DateThreshold ($)Target ($)Maximum ($)Threshold (#)Target (#)Maximum (#)
Charles Liang(2)11/14/2023———1,000,0005,000,0005,000,000——4528,094,976
David Weigand8/11/2023———————150,00025.442,225,384
8/11/2023——————20,000——508,860
1/23/202410,940(3)————————
1/23/2024———(3)(3)(3)———440,239
5/3/2024———————62,55078.273,028,718
5/3/2024——————23,770——1,860,478
Don Clegg8/11/2023——————10,000——254,430
1/23/202422,654(3)————————
1/23/2024———(3)(3)(3)———277,510
5/3/2024———————54,21078.272,624,889
5/3/2024——————20,600——1,612,362
George Kao8/11/2023——————10,000——254,430
1/23/202416,466(3)————————
1/23/2024———(3)(3)(3)———88,751

(1)Amounts disclosed in this column represent the fair value of the RSU and stock option awards as of the date of grant or award opportunity computed in accordance with ASC Topic 718, excluding the effect of estimated forfeitures.

(2)These stock options are performance-based and shall vest and become exercisable depending upon the degree of satisfaction of both the Stock Price Goals and Revenue Goals discussed above in CD&A. The Stock Price Goals must be achieved on or prior to March 31, 2029 and the Revenue Goals must be achieved on or prior to December 31, 2028. The options may vest in tranches of 1,000,000 shares each only when coordinating Stock Price Goals and Revenue Goals, respectively (of $45.00 sixty-trading-day-average stock price and $13.0 billion in four-consecutive-fiscal-quarter revenue, $60.00 sixty-trading-day-average stock price and $15.0 billion four-consecutive-fiscal-quarter revenue, $75.00 sixty-trading-day-average stock price and $17.0 billion four-consecutive-fiscal-quarter revenue, $90.00 sixty-trading-day-average stock price and $19.0 billion four-consecutive-fiscal-quarter revenue, and $110.00 sixty-trading-day-average stock price and $21.0 billion four-consecutive-fiscal-quarter revenue goals), are achieved. The smallest amount of these stock options (threshold) that can be earned based on performance is vested stock options for 1,000,000 shares for achieving a Stock Price Goal of $45.00 sixty-trading-day-average stock price and a Revenue Goal of $13.0 billion in four-consecutive-fiscal-quarter revenue. However, even if those goals are achieved, if the Company’s stock price remained at $45.00 per share, based on the $45.00 exercise price for these stock options, there would be no appreciation value in those stock options for Mr. Liang. For more information about the operation of this award, see “- Discussion and Analysis of 2023 CEO Performance Award ” above.

(3)As further described in CD&A, each of Messrs. Weigand, Clegg and Kao received a Performance Incentive Award for fiscal year 2024 payable for Mr. Weigand 20% in cash and 80% in PRSUs, and payable for Mr. Clegg and Mr. Kao 50% in cash and 50% in PRSUs, which PRSUs will vest over four years from July 1, 2024. Based on the design of the Performance Incentive Award, there was essentially no target or maximum cash amount to be earned, and essentially no target number of PRSUs to be earned, but the threshold amount of the award was equal to $54,702 for Mr. Weigand, $45,308 for Mr. Clegg, and $32,932 for Mr. Kao, and the award was capped at a payout of no more than 2,500,000 RSUs. The cash portions earned by Messrs. Weigand, Clegg and Kao are reported in the “Non-Equity Incentive Plan Compensation” column of the Fiscal Year 2024 Summary Compensation Table, and the fair values of the RSU portions disclosed in this table, based on probable outcome, as of January 2024 are included in the “Stock Awards” column of the Fiscal Year 2024 Summary Compensation Table. The actual PRSUs earned by Messrs. Weigand, Clegg and Kao for their Performance Incentive Awards are expected to be granted in 2025, as disclosed in CD&A above.

Grants made in fiscal year 2024 are described more fully in the “Compensation Discussion and Analysis” section of this Annual Report. More information concerning the terms of the employment arrangements, if applicable, in effect with our named executive officers during fiscal year 2024 is provided under the "Employment Arrangements, Severance and Change of Control Benefits" under the “Compensation Discussion and Analysis”.

SMCI | 2024 Form 10-K | 162

Outstanding Equity Awards at 2024 Fiscal Year-End

The following table provides information concerning the outstanding equity-based awards as of June 30, 2024, held by our NEOs.

OUTSTANDING EQUITY AWARDS AT 2024 FISCAL YEAR-END TABLE

Option AwardsStock Awards
NameNumber of Securities Underlying Unexercised Options (#) ExercisableNumber of Securities Underlying Unexercised Options (#) UnexercisableEquity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)Option Exercise Price ($)Option Expiration DateNumber of Shares or Units of Stock That Have Not Vested (#)Market Value of Shares or Units of Stock That Have Not Vested ($)****(1)Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)****(14)Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)****(14)
Charles Liang1,667,500——3.511/19/2025————
1,300,000——2.708/2/2027————
10,000,000——4.503/2/2031————
——5,000,000(2)45.0011/14/2033————
David Weigand10,000——3.038/4/2030————
75,000——5.305/5/2032————
11,88047,500(3)—5.305/5/2032————
37,50093,750(4)—25.448/11/2033————
—62,550(5)—78.275/3/2034————
—————21,400(6)1,753,409——
—————28,140(7)2,305,651——
—————20,460(8)1,676,390——
—————4,330(8)354,779——
—————23,770(9)1,947,595——
Don Clegg15,000——3.038/4/2030————
18,14018,160(3)—5.305/5/2032————
—54,210(5)—78.275/3/2034————
—————8,160(6)668,590——
—————23,880(7)1,956,608——
—————3,200(8)262,192——
—————2,650(8)217,128——
—————20,600(9)1,687,861——
George Kao148,400——2.708/2/2027————
15,600——2.043/27/2030————
5,3306,770(10)—2.3710/27/2030————
24,37040,630(11)—7.6611/4/2032————
—————3,040(12)249,082
—————18,320(13)1,501,049——

(1)Represents the closing stock price per share of our common stock as of June 28, 2024 ($81.94) multiplied by the number of shares underlying RSUs that had not vested as of June 30, 2024.

(2)These stock options are performance-based and shall vest and become exercisable depending upon the degree of satisfaction of both the Stock Price Goals and Revenue Goals discussed above in CD&A. The Stock Price Goals must be achieved on or prior to March 31, 2029 and the Revenue Goals must be achieved on or prior to December 31, 2028. The options may vest in tranches of 1,000,000 shares each only when coordinating Stock Price

SMCI | 2024 Form 10-K | 163

Goals and Revenue Goals, respectively, of $45.00 sixty-trading-day-average stock price and $13.0 billion in four-consecutive-fiscal-quarter revenue, $60.00 sixty-trading-day-average stock price and $15.0 billion four-consecutive-fiscal-quarter revenue, $75.00 sixty-trading-day-average stock price and $17.0 billion four-consecutive-fiscal-quarter revenue, $90.00 sixty-trading-day-average stock price and $19.0 billion four-consecutive-fiscal-quarter revenue, and $110.00 sixty-trading-day-average stock price and $21.0 billion four-consecutive-fiscal-quarter revenue, are achieved. The smallest amount of these stock options (threshold) that can be earned based on performance is vested stock options for 1,000,000 shares for achieving a Stock Price Goal of $45.00 sixty-trading-day-average stock price and a Revenue Goal of $13.0 billion in four-consecutive-fiscal-quarter revenue. However, even if those goals are achieved, if the Company’s stock price remained at $45.00 per share, based on the $45.00 exercise price for these stock options, there would be no appreciation value in those stock options for Mr. Liang. For more information about the operation of this award, see “2023 CEO Performance Award ” above.

(3)These incentive and nonqualified stock options vest at the rate of 25% on May 5, 2023 and 1/16th per quarter thereafter, such that the granted options will be fully vested on May 5, 2026.

(4)Option shall vest and become exercisable at the rate of 1/8th of the shares on the first quarter of the vesting commencement date on November 11, 2023, and 1/8th at the end of each successive calendar quarter thereafter.

(5)These incentive and nonqualified stock option vest the rate of 25% on May 3, 2025 and 1/16th per quarter thereafter, such that the granted options will be fully vested on May 3, 2028.

(6)The RSUs vest at the rate of 25% on May 10, 2023 and 1/16th per quarter thereafter, such that the RSUs will be fully vested on May 10, 2026.

(7)The RSUs vest in four equal annual increments on July 1 of each year, beginning on July 1, 2023, such that the RSUs will be fully vested on July 1, 2026.

(8)The RSUs vest in four equal annual increments on July 1 of each year, beginning on July 1, 2024, such that the RSUs will be fully vested on July 1, 2027.

(9)The RSUs vest at the rate of 25% on May 10, 2025 and 1/16th per quarter thereafter, such that the RSUs will be fully vested on May 10, 2028.

(10)These stock options vest at the rate of 25% on October 27, 2021 and 1/16th per quarter thereafter, such that the granted options will be fully vested on October 27, 2024.

(11)These incentive and nonqualified stock options vest at the rate of 25% on November 4, 2023 and 1/16th per quarter thereafter, such that the granted options will be fully vested on November 4, 2026.

(12)These RSUs vest at the rate of 25% on November 10, 2021 and 1/16th per quarter thereafter, such that the RSUs will be fully vested on November 10, 2024.

(13)These RSUs vest at the rate of 25% on November 10, 2023 and 1/16th per quarter thereafter, such that the RSUs will be fully vested on November 10, 2026.

(14)As further described in CD&A, as of the end of fiscal year 2024, each of Messrs. Weigand, Clegg and Kao participated in a Performance Incentive Award for fiscal year 2024 payable for Mr. Weigand 20% in cash and 80% in PRSUs, and payable for Messrs. Clegg and Kao 50% in cash and 50% in PRSUs, which PRSUs will vest over four years from July 1, 2024. Based on the design of the Performance Incentive Award, there was essentially no target number of PRSUs to be earned, but the award was capped at a payout of no more than 2,500,000 RSUs. The actual PRSUs earned by Messrs. Weigand, Clegg and Kao for their Performance Incentive Awards are expected to be granted in 2025, as disclosed in CD&A above, and will appear in this table in subsequent years.

Fiscal Year 2024 Option Exercises and Stock Vested

The following table sets forth the dollar amounts realized by each of our named executive officers pursuant to the exercise or vesting of equity-based awards during fiscal year 2024.

FISCAL YEAR 2024 OPTION EXERCISES AND STOCK VESTED TABLE

Option AwardsStock Awards
NameNumber of Shares Acquired on Exercise (#)Value Realized on Exercise ($)****(1)Number of Shares Acquired on Vesting (#)Value Realized on Vesting ($)****(2)
Charles Liang————
David Weigand549,37011,939,17193,0104,814,164
Don Clegg280,00023,822,96230,4801,484,682
George Kao153,0005,483,83027,0601,426,897

(1)The value disclosed in this column is based on the difference between the price of our common stock at the time of exercise and the exercise price.

(2)The values disclosed in this column are based on the closing price of our common stock on the date of vesting, multiplied by the gross number of shares vested.

Fiscal Year 2024 Pension Benefits and Nonqualified Deferred Compensation

We do not provide any nonqualified deferred compensation arrangements or pension plans. As such, the Pension Benefits disclosure and Nonqualified Deferred Compensation disclosure for fiscal year 2024 are omitted from this Annual Report.

SMCI | 2024 Form 10-K | 164

Fiscal Year 2024 Potential Payments Upon Termination or Change of Control

Other than as set forth below or described elsewhere in this Item 11, “Executive Compensation,” we do not currently, and did not during fiscal year 2024 have, any arrangements with any of our NEOs that provide for any additional or enhanced severance or other compensation or benefits in the event of termination or change of control of our Company.

Other than with respect to each of the 2021 CEO Performance Award and 2023 CEO Performance Award, the Company’s stock option agreements generally provide for three months of exercise of vested options after termination of service, one year of exercise after disability, and one year of exercise after death. Each of the 2021 CEO Performance Award and 2023 CEO Performance Award has certain provisions related to the treatment of such award in the event of a change of control of our Company. See “Discussion and Analysis of 2021 CEO Performance Award” and “Discussion and Analysis of 2023 CEO Performance Award,” respectively. The 2021 CEO Performance Award has fully vested. With respect to the 2023 CEO Performance Award, the first three tranches consisting of options for 3,000,000 shares under the 2023 CEO Performance Award would have been earned thereunder for a change in control occurring on June 28, 2024 (based on the closing stock price of $81.94 on such date which was the last trading day of fiscal year 2024). The exercise price under the 2023 CEO Performance Award is $45.00. As a result, the intrinsic value of these options for 3,000,000 shares would have been $110.8 million on June 28, 2024.

Fiscal Year 2024 CEO Pay Ratio

For fiscal year 2024, the ratio of the annual total compensation of Mr. Liang, our CEO (“2024 CEO Compensation”), to the median of the annual total compensation of all of our employees and those of our consolidated subsidiaries other than Mr. Liang (“2024 Median Annual Compensation”), was 197 to 1. For purposes of this pay ratio disclosure, 2024 CEO Compensation was determined to be $28,103,937, which represents the total compensation reported for Mr. Liang under the “Fiscal Year 2024 Summary Compensation Table,” plus the Company’s contribution to group health and welfare benefits provided to Mr. Liang. 2024 Median Annual Compensation for the identified median employee was determined to be $142,498, which includes the Company’s contribution to group health and welfare benefits provided to the median employee. Please see the CD&A above for more information about Mr. Liang’s compensation arrangements in place for fiscal year 2024, which included participation in the 2023 CEO Performance Award.

Due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision, and thus this pay ratio disclosure is a reasonable estimate.

To identify the median employee, we examined our total employee population as of June 30, 2024 (the “Determination Date”). We had included all 2,885 U.S. full-time, part-time, seasonal and temporary employees of the Company and our consolidated subsidiaries. We had also included all 2,609 full-time, part-time, seasonal and temporary employees of the Company and our consolidated subsidiaries in the Netherlands and Taiwan. We excluded independent contractors and “leased” workers. We also excluded all our employees in European countries, which together represented approximately 1.5% of our total employees worldwide (5,684 individuals), which countries consisted of Belgium (1 individual), France (10 individuals), Germany (23 individuals), Italy (11 individuals), Spain (9 individual), and United Kingdom (30 individuals). We also excluded all our employees in China (48 individuals), Japan (40 individuals), Malaysia (2 individuals), and South Korea (16 individuals), which together represented an additional approximately 1.9% of our total employees worldwide (for a total of 3.4% excluded employees). Our analysis identified 5,494 individuals who were not excluded.

To determine the median of the annual total compensation of all of such employees, other than Mr. Liang, we had generally reviewed compensation for the period beginning on July 1, 2023 and ending on the Determination Date. We had totaled, for each included employee other than Mr. Liang, base earnings (salary, hourly wages and overtime, as applicable) and cash bonuses paid during the measurement period, plus the Company’s contribution to group health and welfare benefits. We did not use any statistical sampling or cost-of-living adjustments for those purposes. A portion of our employee workforce (full-time and part-time) had worked for less than the full fiscal year (due to mid-measurement period start dates, disability status or similar factors, etc.). In determining the median employee, we had generally annualized the total compensation for such individuals other than temporary or seasonal employees (but avoided creating full-time equivalencies) based on reasonable assumptions and estimates relating to our employee compensation program.

SMCI | 2024 Form 10-K | 165

Compensation Program Risk Assessment

We have previously assessed our compensation programs and have concluded that risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us. We concluded that our compensation policies and practices do not encourage excessive or inappropriate risk-taking. We believe our programs are appropriately designed to encourage our employees to make decisions that result in positive short-term and long-term results for our business and our stockholders.

DIRECTOR COMPENSATION

2024 Director Compensation

Under our director compensation policy, we reimburse non-employee directors for reasonable expenses in connection with attendance at Board and committee meetings. Each of Charles Liang, Sara Liu and Yih-Shyan (Wally) Liaw, who are employees and also serve as directors, do not receive any additional compensation from us specifically for their service as directors.

In August 2023, the Board adopted an updated director compensation policy which applied for fiscal year 2024. Under such policy, for their service during a fiscal year, non-employee directors receive an annual retainer of $60,000, payable quarterly in cash. In addition, the chairperson of the Audit Committee receives an additional annual retainer of $30,000 and the chairperson of each of the Compensation Committee and the Nominating and Corporate Governance Committee receives an additional annual retainer of $20,000 and $15,000, respectively, in each case payable quarterly in cash. Each director serving in a non-chairperson capacity on the Audit Committee receives an additional annual retainer of $15,000, each director serving in a non-chairperson capacity on the Compensation Committee receives an additional annual retainer of $10,000 and each director serving in a non-chairperson capacity on the Nominating and Corporate Governance Committee receives an additional annual retainer of $7,500, in each case payable quarterly in cash. Finally, non-employee directors were entitled to $2,000 per meeting for each meeting attended in excess of (1) the regular meetings of the Board and (2) up to 10 additional meetings beyond such regular meetings, provided that notice of the meeting was properly given, a quorum was present, and the meeting was recorded (“Excess Meetings”). During fiscal year 2024, each of Messrs. Fairfax and Liu attended 20 Excess Meetings, Mr. Tuan attended nine Excess meetings, Ms. Lin attended four Excess Meetings, and Mr. Blair attended three Excess Meetings during fiscal year 2024.

In addition, for their service during a fiscal year, non-employee directors also receive an annual equity grant with a value equal to $255,000 (the “Award Value”), with the ultimate number of equity awards granted based on the sixty-trading day average stock price immediately prior to the date of grant (the “Grant Date Stock Price”). Prior to the grant date of such award, non-employee directors during an open trading window period may elect (the “Election”) to receive such equity awards in the form of RSUs (the “RSU Election Percentage”) or stock options (the “Option Election Percentage”). Directors may choose to receive the award value as 100% RSUs, 50% RSUs and 50% options, or 100% options.

–In the event of an RSU election, the number of RSUs to be granted is determined by multiplying the Award Value by the RSU Election Percentage, then dividing that amount by the Grant Date Stock Price (with such quotient rounded down), and such RSUs have a vesting date of the last day of the fiscal year for which service was provided; provided, however, that in the event service by such director shall end prior to such date, a pro rata number of such RSUs vest based upon the length of service from the first day on which service commenced in such fiscal year until the last day of service by such director in such fiscal year.

–In the event of an option election, the number of stock options to be granted is determined by multiplying the Award Value by the Option Election Percentage, then dividing that amount by the Black-Scholes value of the award calculated based on the closing stock price on the day of grant (with such quotient rounded down). The exercise price of such stock options is the closing stock price on the day of grant, the stock options shall have a vesting date of the last day of the fiscal year for which service was provided, and the term of the stock options awarded is five years from the date of grant; provided, however, that in the event service by such director ends prior to such date, (i) a pro rata number of such stock options vest based upon the length of service from the first day on which service commenced in such fiscal year until the last day of service by such director in such fiscal year and (ii) vested stock options remain exercisable at any time prior to the expiration of one year after the date of termination of service (but in any event no later than the expiration date of such stock options).

SMCI | 2024 Form 10-K | 166

Non-employee directors who have not made any Election are deemed to have elected an RSU Election Percentage of 100%. In addition, newly appointed non-employee directors receive their initial equity award in the form of RSUs based upon an RSU Election Percentage of 100%. Once a non-employee director has made an Election, such Election is deemed to apply to all future equity grants unless such director has notified us during an open trading window period of a different Election.

In addition, following the appointment of a lead independent director in December 2023, the Board also adopted a compensation policy for lead independent director service. Under such policy, for their service as lead independent director, such director receives an annual retainer of $55,000 (the “Annual Retainer”) for their one-year term of office. Such director may elect to receive such amount (i) in the form of cash, payable in quarterly installments and prorated for any partial period (a “Cash Election”), (ii) 100% RSUs, (iii) 50% RSUs and 50% options, or (iv) 100% options (each of (ii), (iii) and (iv), an “Equity Election”).

In the event the lead independent director makes an Equity Election (instead of a Cash Election), the ultimate number of equity awards granted for the Annual Retainer will be based on the sixty-trading day average stock price immediately prior to the date of grant (the “LID Grant Date” and the “LID Grant Date Stock Price,” as the case may be).

The LID Grant Date is the date our trading window next opens following the date the lead independent director informs us that he/she desires to make an Equity Election, or as soon as reasonably practical after such date, provided the trading window is open.

–In the event of an RSU election, the number of RSUs to be granted is determined by multiplying the Annual Retainer by the RSU election percentage, then dividing that amount by the LID Grant Date Stock Price (with such quotient rounded down), and such RSUs have a vesting date of the last day of the one-year term of such lead independent director; provided, however, that in the event service by such lead independent director shall end prior to such date, a pro rata number of such RSUs vest based upon the length of service from the first day on which service as lead independent director commenced until the last day of service by such director as lead independent director.

–In the event of an option election, the number of stock options to be granted is determined by multiplying the Annual Retainer by the option election percentage, then dividing that amount by the Black-Scholes value of the award calculated based on the closing stock price on the day of grant (with such quotient rounded down). The exercise price of such stock options is the closing stock price on the LID Grant Date, the stock options have a vesting date of the last day of the one-year term of such lead independent director, and the term of the stock options awarded is five years from the date of grant; provided, however, that in the event service by such lead independent director ends prior to such date, (i) a pro rata number of such stock options vest based upon the length of service from the first day on which service as lead independent director commenced until the last day of service by such director as lead independent director and (ii) vested stock options remain exercisable at any time prior to the expiration of one year after the date of termination of service by such director with us (but in any event no later than the expiration date of such stock options).

The following table shows for fiscal year 2024 certain information with respect to the compensation of all our non-employee directors who served in such capacities during fiscal year 2024:

SMCI | 2024 Form 10-K | 167

FISCAL YEAR 2024 DIRECTOR COMPENSATION**(1)**

NameFees Earned or Paid in Cash ($)****(2)Stock Awards ($)****(3)Option Awards ($)****(4)All Other Compensation ($)Total ($)
Daniel Fairfax125,000248,325——373,325
Judy Lin77,993124,163127,197—329,353
Robert Blair68,184—254,505—322,689
Sherman Tuan105,500248,325——353,825
Shiu Leung (Fred) Chan(5)70,705—254,505—325,210
Tally Liu140,000174,344154,470—468,814

(1)Susan Mogensen (Susie Giordano) was appointed to the Board in August 2024, and did not receive non-employee director compensation during fiscal year 2024 which ended June 30, 2024.

(2)This column consists of annual director fees, lead independent director fees, non-employee committee chairman fees, and other committee member fees, in each case earned for fiscal year 2024.

(3)The dollar amounts in this column represent the aggregate grant date fair values of the RSU awards granted during fiscal year 2024 calculated in accordance with ASC Topic 718. Assumptions used in the calculation of the grant date fair value amounts are included in Part II, Item 8, "Financial Statements and Supplementary Data", and Note 11, “Stock-based Compensation and Stockholders’ Equity” in the Notes to the Consolidated Financial Statements for fiscal year 2024 included in the Annual Report. The grant of RSUs made in connection with director service to each of Mr. Fairfax, Ms. Lin, Mr. Liu, and Mr. Tuan had a grant date fair value of $26.25 per share. The grants of RSUs and options to Mr. Liu made in connection with lead independent director service had a grant date fair value of $58.35 per share and $26.74 per share, respectively.

(4)The dollar amounts in this column represent the aggregate grant date fair values of the Option awards granted during fiscal year 2024 calculated in accordance with ASC Topic 718. Assumptions used in the calculation of the grant date fair value amounts are included in Part II, Item 8, "Financial Statements and Supplementary Data", and Note 11, “Stock-based Compensation and Stockholders’ Equity” in the Notes to the Consolidated Financial Statements for fiscal year 2024 included in the Annual Report. The grant of options made in connection with director service to each of Mr. Blair, Mr. Chan, Ms. Lin, and Mr. Liu had a grant date fair value of $11.16 per share. The grant of options to Mr. Liu made in connection with lead independent director service had a grant date fair value of $26.74 per share.

(5)Mr. Chan resigned as a director on March 11, 2024.

The table below sets forth the aggregate number of shares underlying stock and option awards held by our non-employee directors as of June 30, 2024.

Name**(1)**Stock Awards**(2)**Option Awards
Daniel Fairfax——
Judy Lin—11,400
Robert Blair—22,810
Sherman Tuan—25,000
Shiu Leung (Fred) Chan(3)—15,890
Tally Liu86012,420

(1)Susan Mogensen (Susie Giordano) was appointed to the Board in August 2024, and did not receive stock or option awards during fiscal year 2024 which ended June 30, 2024.

(2)For fiscal year 2024, we made grants for non-employee director service under the Super Micro Computer, Inc. 2020 Equity and Incentive Compensation Plan on August 24, 2023, to such persons serving on such date, which grants had a vesting commencement date of June 30, 2023. All such awards granted to the non-employee directors vested on June 30, 2024. As a result, because all such awards had vested, there are no shares underlying stock awards for such persons as of June 30, 2024, except for Mr. Liu who received awards of RSUs and options on February 1, 2024 in connection with his service as lead independent director which awards vest on December 6, 2024.

(3)Mr. Chan resigned as a director on March 11, 2024.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee as of the date of this Annual Report is a current or former officer or employee of our Company or has had any relationship with our Company requiring disclosure.

In addition, during fiscal year 2024, none of our executive officers served as a member of the compensation committee of the board of directors of any other entity that has one or more executive officers who served on our Compensation Committee of the Board.

SMCI | 2024 Form 10-K | 168

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